Refer to the graph below, and suppose it depicts the average total cost functions for firms that produces automobiles. Please answer: a. Which of the curves is most likely to characterise the short-run average total cost curve of the biggest factory, and why? b. If the firm is currently operating on ATCB, what options does it have if it wants to change its level of automobile production over the next couple of weeks, and why? c. This firm experiences constant returns to scale at which output levels, and why?
Refer to the graph below, and suppose it depicts the average total cost functions for firms that produces automobiles. Please answer: a. Which of the curves is most likely to characterise the short-run average total cost curve of the biggest factory, and why? b. If the firm is currently operating on ATCB, what options does it have if it wants to change its level of automobile production over the next couple of weeks, and why? c. This firm experiences constant returns to scale at which output levels, and why?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Refer to the graph below, and suppose it depicts the average total cost functions for firms that produces automobiles. Please answer:
a. Which of the curves is most likely to characterise the short-run average total cost curve of the biggest factory, and why?
b. If the firm is currently operating on ATCB, what options does it have if it wants to change its level of automobile production over the next couple of weeks, and why?
c. This firm experiences constant returns to scale at which output levels, and why?
Transcribed Image Text:Average
Total
Cost ($)
M
ATCA
ATCB,
N
ATCC
ATCD
Quantity of
Automobiles
per day
|||||
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