Optimal Output Decision
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Suppose a firm has only three possible plant-size options represented by the ATC curves shown in the accompanying figure.
1. What plant size will the firm choose in producing each of the following outputs?
2. Draw the firm's long-run average-cost curve on the diagram and define this curve.
(a) 50;
(b) 130;
(c) 160, and
(d) 250
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Solution Summary
Plant size and optimal production is examined. The expert examines ATC curves for an accompanying figure.
Solution Preview
The firm chooses the plant sizes that give it the lowest ATC for that level of production.
(a) plant size #1
(b) plant ...
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