In Figure 20.4, a firm that produces over 800 units of output should choose a plant with which short-run average total cost function? A)ATC₁ only. B)ATC₂ only. C)ATC₃ only. D)Either ATC₂ or ATC_3.

Question

Quizplus · Accepted Answer

From the graph, it is clear that after producing 800 units of output, the short-run average total cost function with the lowest value is ATC₃. Therefore, the firm should choose the plant with the ATC₃ short-run average total cost function.