Consider the following cost curves for Firm X, a perfectly competitive firm.
FIGURE 9- 3
-Refer to Figure 9- 3. If Firm X has a capital stock that generates SRATC1, then in the long run Firm X will have to
A) maintain its output level at Q1, because it is maximizing its short- run profits.
B) set its output at Q1 with an expanded plant size.
C) set its output at Q1 with the existing plant size.
D) expand its output to Q2 with the existing plant size.
E) either expand its plant size or exit from the industry.
Correct Answer:
Verified
Q45: 9.3 Short-Run Decisions
Assume the following total cost
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