The following figure depicts a firm's long-run average total cost and selected short-run average total cost curves.

-Refer to the figure above.The firm is currently producing at point B.An increase in its capital may be represented by ________.

Question

The following figure depicts a firm's long-run average total cost and selected short-run average total cost curves.
 
-Refer to the figure above.The firm is currently producing at point B.An increase in its capital may be represented by ________.

Quizplus · Accepted Answer

An increase in its capital would shift its short-run cost curves downward, leading the firm to choose a new production point on a lower short-run cost curve. This would result in a movement along its long-run cost curve to a point such as C.

The Following Figure Depicts a Firm's Long-Run Average Total Cost