Figure 11-10 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCa, ATCb and ATCc.
-Refer to Figure 11-10. In the short run, if the firm sells fewer than 5,000 picture frames per month

Question

Quizplus · Accepted Answer

In the short run, a firm should choose the scale of operation that minimizes average total cost for the given level of output. If the firm sells fewer than 5,000 picture frames, it should operate at the scale associated with ATCa, as it represents the lowest average total cost for lower levels of output.

Figure 11-10 Illustrates the Long-Run Average Cost Curve for a Firm