Which of the following statement/statements are true?
Statement 1: LRAC is U shaped due to returns to scale.
Statement 2: SMC is inverse U shaped due to law of variable proportion.
Statement 1: LRAC is U shaped due to returns to scale.
Statement 2: SMC is inverse U shaped due to law of variable proportion.
Answer & explanation
Correct answer: option 3
LRAC is U shaped due to returns to scale. SMC is also U shaped due to law of variable proportion.