Exhibit 7-15 Long and Short-Run cost of Producing Color Printers
-If the firm represented in Exhibit 7-15 wants to produce output level Q₂, then in the long run it should build a plant size with average total cost curve of

Question

Exhibit 7-15 Long and Short-Run cost of Producing Color Printers

-If the firm represented in Exhibit 7-15 wants to produce output level Q₂, then in the long run it should build a plant size with average total cost curve of

Quizplus · Accepted Answer

The long-run average total cost curve is the envelope of all the short-run average total cost curves. The firm should build a plant size with an average total cost curve that is tangent to the long-run average total cost curve at the desired output level. In this case, the firm wants to produce output level Q2, so it should build a plant size with average total cost curve B.

Exhibit 7-15 Long and Short-Run Cost of Producing Color Printers