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 is indicated?

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 is indicated?

Quizplus · Accepted Answer

The minimum efficient scale of producing tires is where the long-run average cost curve intersects the horizontal axis, which is at a quantity of 200,000 tires. Therefore, option C is the correct answer. Option A cannot be determined from the graph. Option B is incorrect because the total cost of producing 100,000 tires is much lower than the cost of producing 200,000 tires on the long-run average cost curve. Option D cannot be determined from the graph. Option E cannot be determined from the graph since the marginal cost curve is not shown.

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