7. Long-run cost relationshipsThe following graph shows the short-run average total cost curves and the long-run average cost curve for a publishing firm. The five markedquantities indicate points of tangency between each short-run average total cost curve (SRATC) and the long-run average cost curve (LRAC); forexample, Q₁ marks the point of tangency between SRATC₁ and LRAC.The orange point on SRATC3 indicates the firm's current output level in the short run (Q3).COST PER UNITSRATC₁LRACSRATC2|"Q₂2₂SRATC3O"|11Q3QUANTITY OF OUTPUTQ₁SRATC5SRATC41 In the long run, if the firm decides to keep output at its initial level, what will it likely do?O Shift to operate on SRATC1O Shift to operate on SRATC2Shut downStay on SRATC 3At which output level (or range of output levels) is this firm operating at the ideal plant size? Assuming that it cannot change it's current cost curve.O Q₂O₂ to 2424O 0 to 23O Q3

The long-run average cost curve depicts the minimum cost of producing each unit of output in the…

The following graph shows the short-run average total cost curves and the long-run average cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (SRATC) and the long-run average cost curve (LRAC); for example, Q₁ marks the point of tangency between SRATC₁ and LRAC.

The following graph shows the short-run average total cost curves and the long-run average cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (SRATC) and the long-run average cost curve (LRAC); for example, Q₁ marks the point of tangency between SRATC₁ and LRAC.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Lines that represent bundles of inputs that cost the same total amount are called: cost curves. isoquants. isoprofit curves. O isocost curves. Ototal cost curves.
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Question 16 of 20 Portia owns and manages a sporting apparel company. Consider the given average cost (AC), average variable cost (AVC), and marginal cost (MC) curves for track suits. All but the MC curve have been placed incorrectly. Portia knows that the minimum average cost for a track suit is $7 and the minimum of average variable cost is $5. Rearrange the AC and AVC curves so that they are consistent with the marginal cost curve. If the average fixed cost curve is added to the graph, its 20 shape would be 19 AVC |MC constant. 18 17 O always decreasing. 16 O always increasing. 14 13 O U shaped. 12 11 10 AC 1 2 3 4 7 8 10 Qauntity CO 8으으N 으5 4 32 10 98 7 65 4 3 2 1 0 Price ($)
long-run cost relationships
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Explain the effects of an increase in fixed costs on the optimal levels of production. Draw shifted total cost, average cost, and marginal cost curves to illustrate your answer.