2) Given the graph of the long run planning curve for a firm below, Price and cost (dollars) P Long-run Adjustment of Firm Size SMC, SAC, SMC₂ SAC, SMC, Q₂ Quantity QUR SAC SMC Q₂ SAC LAC A) Firm size #1 is making a profit but less profit than firm size #2. B) Firm size #2 must downsize its operations if the price falls to PLR- C) Firm size #4 is making an average profit at price Pequal price P minus SAC4 by operating at Q4. D) Firm size #2 is making a total profit at price P equal to price P minus SAC2 by operating at quantity Q2.

2) Given the graph of the long run planning curve for a firm below, Price and cost (dollars) P Long-run Adjustment of Firm Size SMC, SAC, SMC₂ SAC, SMC, Q₂ Quantity QUR SAC SMC Q₂ SAC LAC A) Firm size #1 is making a profit but less profit than firm size #2. B) Firm size #2 must downsize its operations if the price falls to PLR- C) Firm size #4 is making an average profit at price Pequal price P minus SAC4 by operating at Q4. D) Firm size #2 is making a total profit at price P equal to price P minus SAC2 by operating at quantity Q2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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