In the picture below, how much production capacity is needed if the firm uses production smoothing? "Capacity" is defined as the maximum amount that can be produced in any given period. Assume that it takes some time to build a building or hire more people, such thatthe firm cannot add capacity between periods.

Hint: you will find the figure in the "debrief slide deck", but you may not find an explicit answer to this question in the readings. The question is testing whether you understand the figure.

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