Refer to the long-run cost diagram for a firm. If the firm produces output Q₂ at an average cost of ATC₃, then the firm is
A)producing the profit-maximizing output but is failing to minimize production costs.
B)incurring X-inefficiency but is realizing all existing economies of scale.
C)incurring X-inefficiency and is failing to realize all existing economies of scale.
D)producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.

Question

Refer to the long-run cost diagram for a firm. If the firm produces output Q₂ at an average cost of ATC₃, then the firm is
A)producing the profit-maximizing output but is failing to minimize production costs. 
B)incurring X-inefficiency but is realizing all existing economies of scale. 
C)incurring X-inefficiency and is failing to realize all existing economies of scale. 
D)producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.

Quizplus · Accepted Answer

The Answer of  Refer to the long-run cost diagram for a firm. If the firm produces output Q₂ at an average cost of ATC₃, then the firm is
A)producing the profit-maximizing output but is failing to minimize production costs. 
B)incurring X-inefficiency but is realizing all existing economies of scale. 
C)incurring X-inefficiency and is failing to realize all existing economies of scale. 
D)producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.

Refer to the Long-Run Cost Diagram for a Firm