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The Figure below shows the short-run total cost curves SRATC at different scales and the long-run average total cost curve LRATC of a firm. Which

The Figure below shows the short-run total cost curves SRATC at different scales and the long-run average total cost curve LRATC of a firm.

  1. Which of the SRATC curves corresponds to the minimum efficiency scale?
  2. What is the optimal scale of producing Q1?
  3. Is Q1the optimal output for the scale SRATC1?
  4. If not, what is the optimal output for scale SRATC1?
  5. If conditions are such that the firm must produce QA, which scale should it use to maximise profits?
image text in transcribed
LRATC SRATC, Average Total Cost SRATC; SRATC CH SRATC- C L QM Quantity Q1 QA

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