At an output ________ of a firm's short run average total cost curve, a firm can use its fixed capital input at a lower average cost but only by using its variable input at a higher average cost.
A) beyond the minimum point
B) beyond the maximum point
C) prior to the minimum point
D) equal to the highest level

Question

Quizplus · Accepted Answer

At an output beyond the minimum point of a firm's short run average total cost curve, the firm experiences increasing average total costs because it is using its variable inputs (like labor) more intensively, which increases costs at a faster rate than output. This occurs after the firm has already minimized average total costs at the minimum point of the curve.

At an Output ________ of a Firm's Short Run Average