Figure 11-11 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 11-11.In the short run,if the firm sells fewer than 5,000 picture frames per month

Question

Quizplus · Accepted Answer

According to the short-run average cost curves, the minimum cost for producing fewer than 5,000 picture frames per month is associated with scale of operation ATCa, which has the lowest average cost at the output level. Thus, the firm should produce with the scale of operation associated with ATCa in the short run.

Figure 11-11 Illustrates the Long-Run Average Cost Curve for a Firm