Multiple choice

Which one of the following is also known as plant curve?

  1. Long run average cost curve

  2. Short-run average cost curve

  3. Average variable cost curve

  4. Average total cost curve

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The short-run average cost curve is called the plant curve because it shows the cost behavior for a given plant size with fixed capital. In the short run, at least one factor (usually capital/plant) is fixed, so the SRAC reflects costs for that specific plant. The long run curve allows plant size to vary.

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