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Which type of cost curve does the curve represent?

User Sheepshead
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Final answer:

The curve in the provided figure represents a long-run average cost curve, showcasing economies of scale where all production factors can change and larger scale leads to lower average costs.

Step-by-step explanation:

The type of cost curve represented by the curve in question, which is downward-sloping as opposed to U-shaped, is a long-run average cost curve. This is because it reflects a scenario where all factors of production can change, which is indicative of economies of scale. Unlike the short-run average cost curves, which are based on fixed costs and variable costs, the long-run cost curve indicates that, as the scale of production increases (from output levels Q₁ to Q₂ to Q3), the average costs decrease, illustrating the benefits of economies of scale.

User Elirigobeli
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