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The following figure shows the long-run average cost curve for a tire manufacturer and the long-run average cost curve for a rubber producer. If ten

The following figure shows the long-run average cost curve for a tire manufacturer and the long-run average cost curve for a rubber producer. If ten pounds of rubber is required for producing one tire, which of the following is true?

a.

The tire manufacturer should produce more than 200,000 tires.

b.

The rubber producer must be a monopolist.

c.

The minimum efficient scale of rubber production is 2 million pounds.

d.

The tire manufacturer should integrate backward into producing rubber.

e.

The tire manufacturer should buy rubber rather than produce it.

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