The Figure Below Shows a Family of Cost Curves for a Firm

question 52

Multiple Choice

The figure below shows a family of cost curves for a firm. The subscripts 1, 2, and 3 for the SRATC curves refer to different plant sizes. FIGURE 8- 3
-Refer to Figure 8- 3. The difference between the SRATC curves and the LRAC curve is that

• A) the LRAC is an envelope curve, joining the minimum points on all SRATC curves.
• B) for the SRATC curves, one or more of the factors of production is fixed, whereas for the LRAC curve, all factors of production are variable.
• C) the SRATC curves show the lowest attainable cost of production at each level of output when all factors are variable in the short run, whereas the LRAC curve shows the same in the long run.
• D) the SRATC curves show diseconomies of scales, whereas the LRAC curve shows economies of scale.
• E) the SRATC curves show the optimal plant size when all factors of production are variable, whereas the LRAC shows the lowest cost attainable associated with each LRAC curve.

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Definitions:

Stomach

A digestive organ located in the upper abdomen, involved in the second phase of digestion, processing food by mixing and breakdown.

Liver

A large, vital organ in vertebrates responsible for detoxification, protein synthesis, and the production of biochemicals necessary for digestion among other functions.

Pylorus

The region of the stomach that connects to the duodenum and acts as a valve to control the flow of partially digested food.

Stomach

A muscular organ in the gastrointestinal tract of vertebrates that uses acids and enzymes to digest food.