In describing the optimal size of an investment fund, a writer for the Wall Street Journal observed: … at first, bigger is better for both investors and managers…. Managing money is expensive. Small funds have many fixed costs…. If a fund is small, it can’t generate enough fees to cover costs…. The result is that in terms of performance, funds should want to get big to cover costs and maximize returns, but not so big that diseconomies of scale erode returns. Draw a graph of a long-run average cost curve for a typical firm in the investment fund industry. In your graph, draw and label the following.
a. A short-run average total cost curve for an investment fund that has not reached minimum efficient scale.

b. A short-run average total cost curve for an investment fund that has reached minimum efficient scale.
c. A short-run average total cost curve for an investment fund that experiences diseconomies of scale.
d. A range of output within which investment funds experience constant returns to scale.