1. Refer to the graph provided to answer the following questions.

a. The same level of fixed cost that puts the firm at point B when the quantity is 3 minimizes short-run average total cost for what output level?

b. At an output level of 3, is the firm experiencing economies or diseconomies of scale? Explain.

c. In the long run, if the firm expects to produce an output of 9, the firm will produce on which shortrun average total cost curve and at which point on the graph?

Transcribed Image Text:

Cost of unit B ATC, ATC ATC, LRATC W 0 3 4 5 6 7 8 9 456789 Quantity (units)