This figure shows the long-run average total cost curve for a firm that produces basketballs, along with four short-run average total cost curves. Each of the short-run average total cost curves corresponds to a different plant size. SRATC₁ corresponds to Plant size 1, SRATC₂ corresponds to Plant size 2, and so forth.
FIGURE 7-5

-Refer to Figure 7-5. Which plant is optimal if the firm is going to produce 500 basketballs per week?
A) Plant 1
B) Plant 2
C) Plant 3
D) Plant 4

Question

This figure shows the long-run average total cost curve for a firm that produces basketballs, along with four short-run average total cost curves. Each of the short-run average total cost curves corresponds to a different plant size. SRATC₁ corresponds to Plant size 1, SRATC₂ corresponds to Plant size 2, and so forth.
FIGURE 7-5
 
-Refer to Figure 7-5. Which plant is optimal if the firm is going to produce 500 basketballs per week?
A) Plant 1 
B) Plant 2 
C) Plant 3 
D) Plant 4

Quizplus · Accepted Answer

Plant 1 has the lowest total cost of $10,000 for producing 500 basketballs per week.

This Figure Shows the Long-Run Average Total Cost Curve for a Firm