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.If the firm chooses to produce and sell 25 000 frames per month by operating in the short run with a scale operation represented by ATC_c A)the firm will not be operating efficiently. B)the firm will be operating efficiently. C)the firm would lower its average costs by reducing its scale of operation. D)the firm will not be able to earn a profit.

Question

Quizplus · Accepted Answer

The point where the short-run average cost curve for ATC_c intersects the long-run average cost curve represents the minimum average cost point for 25 000 frames per month. Therefore, the firm will be operating efficiently at this point.

Figure 711 Figure 7