Figure 11-6 Figure 11-6 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: ATCa,ATCb and ATCc.
-Refer to Figure 11-6.In the short run,if the firm sells fewer than 5,000 picture frames per month

Question

Figure 11-6  Figure 11-6 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: ATCa,ATCb and ATCc.
-Refer to Figure 11-6.In the short run,if the firm sells fewer than 5,000 picture frames per month

Quizplus · Accepted Answer

In the short run, the firm should produce with the scale of operation associated with ATCa if it sells fewer than 5,000 picture frames per month. This is because ATCa represents the lowest point on the short-run average cost curve at this level of output, indicating the minimum average cost. Both ATCb and ATCc have higher average costs at this level of output.

Figure 11-6 Figure 11-6 Illustrates the Long-Run Average Cost