CONNECT F/MICROECONOMICS
21st Edition
ISBN: 2810022151240
Author: McConnell
Publisher: MCG
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Question
Chapter 11, Problem 1P
To determine
The rate of return and economic profit.
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7. Long-run cost relationships
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
|
"
Q₂2₂
SRATC3
O
"
|
1
1
Q3
QUANTITY OF OUTPUT
Q₁
SRATC5
SRATC4
1
2 .
Stuff, Incorporated is a firm with a total revenue of $1,000, marginal cost of $5, and average variable cost of $4. Both the output and input markets are
perfectly competitive and Stuff, Inc. is in long run equilibrium. Stuff, Inc.'s output and total fixed costs must be equal to which of the following?
O Output 200; Fixed Cost $200
O Output 200; Fixed Cost $400
O Output 200; Fixed Cost $800
O Output 250; Fixed Cost $800
O Output 250; Fixed Cost $400
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