SA C Long-Run AC 1 Output Refer to the diagram. If a firm produces output Q₁ at a unit cost of b, then the Refer to the diagram. If a firm produces output Q₁ at a unit cost of b, then the Multiple Choice firm is not fulfilling the least-cost rule in employing resources. О firm may or may not be maximizing profits. О marginal product per dollars' worth of each resource employed is not the same. firm has achieved minimum efficient scale.

How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?

Consider this statement: “A firm should increaseoutput when it makes a profit.” Do you agree ordisagree? Explain.

100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars)