Figure 7.11 Figure 7.11 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: ATC a , ATC b and ATC c .
-Refer to Figure 7.11.In the short run, if the firm sells fewer than 5000 picture frames per month,

Question

Figure 7.11  Figure 7.11 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: ATC a , ATC b and ATC c .
-Refer to Figure 7.11.In the short run, if the firm sells fewer than 5000 picture frames per month,

Quizplus · Accepted Answer

In the short run, if the firm sells fewer than 5000 picture frames per month, it should produce with the scale of operation associated with ATC_a because it has the lowest short-run average cost among the three firm sizes. This is because the ATC_a curve intersects the long-run average cost curve at the minimum point, indicating that it is the most efficient scale of operation in the long run.

Figure 711 Figure 7