Both A and R are true and R is the correct explanation of A
Both A and R are true, but R is not a correct explanation of A
A is true, but R is false
A is false, but R is true
Answer is Right!
Answer is Wrong!
The correct answer is: Both A and R are true, but R is not a correct explanation of A.
The long run cost curve is L-shaped because, in the long run, all costs are variable. This means that firms can choose the size of their plants and the technology they use to produce their goods. As a result, firms can always produce at the lowest possible cost per unit of output.
The new techniques of production of large plants do reduce the total costs per unit of output. However, this is not the reason why the long run cost curve is L-shaped. The long run cost curve is L-shaped because, in the long run, all costs are variable.
Here is a more detailed explanation of each option:
- Both A and R are true and R is the correct explanation of A. This is not the correct answer because, as explained above, the new techniques of production of large plants do not explain why the long run cost curve is L-shaped.
- Both A and R are true, but R is not a correct explanation of A. This is the correct answer because, as explained above, the new techniques of production of large plants do reduce the total costs per unit of output, but this is not the reason why the long run cost curve is L-shaped.
- A is true, but R is false. This is not the correct answer because, as explained above, the new techniques of production of large plants do reduce the total costs per unit of output.
- A is false, but R is true. This is not the correct answer because, as explained above, the long run cost curve is L-shaped, and the new techniques of production of large plants do reduce the total costs per unit of output.