CONNECT F/MICROECONOMICS
21st Edition
ISBN: 2810022151240
Author: McConnell
Publisher: MCG
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Question
Chapter 10, Problem 7DQ
To determine
Shut down point in the short run.
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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 orange point on SRATC3 indicates the firm's current output level in the short run (Q3).
COST PER UNIT
SRATC₁
LRAC
SRATC₂
Q₁ Q₂
SRATC3
24
QUANTITY OF OUTPUT
SRATC5
SRATC4
|
1
Q5
<
The following graph shows the short-run average total cost curves for different plant sizes and the long-run average total cost curve for a publishing
firm. The five marked quantities indicate points of tangency between each short-run average total cost (ATC) curve and the long-run average total
cost (LRATC) curve; for example, Q1 marks the point of tangency between ATC1 and LRATC.
The orange point on ATC3 indicates the firm's current output level in the short run (Q4).
ATC,
ATC5
LRATC
ATC2
ATC,
ATC.
Q,
Q2
OUTPUT
In the long run, if the firm decides to keep output at its initial level, what will it likely do?
COST PER UNIT
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