The figure below shows a family of cost curves for a firm.The subscripts 1,2,and 3 for the SRATC curves refer to different plant sizes. FIGURE 8-3
-Refer to Figure 8-3.Each of the three SRATC curves shows
A)technically inefficient methods of production,given that they lie above the LRAC.
B)the lowest cost attainable,given that the plant size is the largest it can possibly be.
C)the output that is possible when all factors of production are fixed.
D)the lowest cost attainable,holding the plant size constant.
E)optimal plant sizes in the long run.

Question

The figure below shows a family of cost curves for a firm.The subscripts 1,2,and 3 for the SRATC curves refer to different plant sizes.  FIGURE 8-3
-Refer to Figure 8-3.Each of the three SRATC curves shows
A)technically inefficient methods of production,given that they lie above the LRAC. 
B)the lowest cost attainable,given that the plant size is the largest it can possibly be. 
C)the output that is possible when all factors of production are fixed. 
D)the lowest cost attainable,holding the plant size constant. 
E)optimal plant sizes in the long run.

Quizplus · Accepted Answer

Each of the three SRATC curves shows the lowest cost attainable holding the plant size constant. This is because each curve represents the minimum average total cost for each respective plant size, given a fixed level of output. Therefore, the firm can choose the plant size that corresponds to the lowest point on the corresponding SRATC curve to minimize its costs for that level of output.

The Figure Below Shows a Family of Cost Curves for a Firm.The