Question: 1.16. True or false? Explain your reasoning. a. The short-run average total cost can never be less than the long-run average total cost. b. The

1.16. True or false? Explain your reasoning.

a. The short-run average total cost can never be less than the long-run average total cost.

b. The short-run average variable cost can never be less than the long-run average total cost.

c. In the long run, choosing a higher level of fixed cost shifts the long-run average total cost curve upward.

17. Wolfsburg Wagon (WW) is a small automaker. The accompanying table shows WW's long-run average total cost.

Quantity of cars LRATC of car 1 $30 000 2 20 000 3 15 000 4 12 000 5 12 000 6 12 000 7 14 000 8 18 000

a. For which levels of output does WW experience increasing returns to scale?

b. For which levels of output does WW experience decreasing returns to scale?

c. For which levels of output does WW experience constant returns to scale?

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