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Suppose a firm has only three possible plant-size options, represented by the ATC curves shown in the figure. What plant size will the firm choose in producing (a) 50, (6) 130, (c) 160, and (d) 250 units of output? Average Costs 40 30 ATC ATC 20 ATC 10 50 130 160 250 30 60 90 120 150 180 210 240 270 300 Output a. 50 units of output: (Click to select) v b. 130 units of output: (Click to select) c. 160 units of output: (Click to select) d. 250 units of output (Click to select) v ATC

Suppose a firm has only three possible plant-size options, represented by the ATC curves shown in the figure. What plant size will the firm choose in producing (a) 50, (6) 130, (c) 160, and (d) 250 units of output? Average Costs 40 30 ATC ATC 20 ATC 10 50 130 160 250 30 60 90 120 150 180 210 240 270 300 Output a. 50 units of output: (Click to select) v b. 130 units of output: (Click to select) c. 160 units of output: (Click to select) d. 250 units of output (Click to select) v ATC

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The image presents a scenario where a firm must choose between three possible plant-size options based on their Average Total Cost (ATC) curves. These plant sizes are represented by the curves ATC₁, ATC₂, and ATC₃. The graph illustrates average costs as a function of output, with output on the x-axis ranging from 0 to 300, and ATC on the y-axis ranging from 0 to 50. Key points on the graph: - **ATC₁ Curve**: This curve displays the cost structure for a smaller plant size. - **ATC₂ Curve**: Represents a medium-sized plant with its own cost dynamics. - **ATC₃ Curve**: Shows the costs for the largest plant size. The task is to select the optimal plant size for the firm when producing (a) 50 units, (b) 130 units, (c) 160 units, and (d) 250 units of output. The decision should be based on which ATC curve provides the lowest average cost for the given output levels. For each output level, there are dropdown menus to select the appropriate ATC curve: - a. **50 units of output**: [Dropdown selection for ATC curve] - b. **130 units of output**: [Dropdown selection for ATC curve] - c. **160 units of output**: [Dropdown selection for ATC curve] - d. **250 units of output**: [Dropdown selection for ATC curve] Students are tasked with analyzing the graph to make cost-efficient decisions based on the intersection of production levels and corresponding ATC curves.
Transcribed Image Text:The image presents a scenario where a firm must choose between three possible plant-size options based on their Average Total Cost (ATC) curves. These plant sizes are represented by the curves ATC₁, ATC₂, and ATC₃. The graph illustrates average costs as a function of output, with output on the x-axis ranging from 0 to 300, and ATC on the y-axis ranging from 0 to 50. Key points on the graph: - **ATC₁ Curve**: This curve displays the cost structure for a smaller plant size. - **ATC₂ Curve**: Represents a medium-sized plant with its own cost dynamics. - **ATC₃ Curve**: Shows the costs for the largest plant size. The task is to select the optimal plant size for the firm when producing (a) 50 units, (b) 130 units, (c) 160 units, and (d) 250 units of output. The decision should be based on which ATC curve provides the lowest average cost for the given output levels. For each output level, there are dropdown menus to select the appropriate ATC curve: - a. **50 units of output**: [Dropdown selection for ATC curve] - b. **130 units of output**: [Dropdown selection for ATC curve] - c. **160 units of output**: [Dropdown selection for ATC curve] - d. **250 units of output**: [Dropdown selection for ATC curve] Students are tasked with analyzing the graph to make cost-efficient decisions based on the intersection of production levels and corresponding ATC curves.
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