Figure 11-11

Figure 11-11 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 11-11.In the short run, if the firm sells fewer than 5,000 picture frames per month,

Question

Figure 11-11
  
Figure 11-11 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 11-11.In the short run, if the firm sells fewer than 5,000 picture frames per month,

Quizplus · Accepted Answer

In the short run, the firm should produce with the scale of operation associated with ATCₐ if it sells fewer than 5,000 picture frames per month as it corresponds to the minimum efficient scale of production for the firm. If it produces with a smaller scale of operation, it will experience diseconomies of scale, and if it produces with a larger scale of operation, it will experience economies of scale.

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