Exhibit 14.1

-Refer to Exhibit 14.1,which shows the long-run average cost curve for a tire manufacturer and the long-run average cost curve for a rubber producer.Which of the following can be concluded from the information provided?

Question

Exhibit 14.1
  
-Refer to Exhibit 14.1,which shows the long-run average cost curve for a tire manufacturer and the long-run average cost curve for a rubber producer.Which of the following can be concluded from the information provided?

Quizplus · Accepted Answer

From the graph, the minimum point on the rubber producer's long-run average cost curve is at 4 million pounds. This represents the point at which the producer achieves its minimum efficient scale. However, we cannot conclude anything about the relative costs of producing rubber and tires, or the total cost of producing different quantities of tires, as this information is not provided on the graph. We also cannot conclude anything about the minimum efficient scale of the tire manufacturer as this is not shown on the graph. Finally, we cannot make any conclusions about marginal cost based on the information provided.

Exhibit 14.1 -Refer to Exhibit 14.1,which Shows the Long-Run Average Cost Curve