Refer to the Graph Shown

question 77

Multiple Choice

Refer to the graph shown. A firm that produces 900 units of output using the plant size associated with SATC₂ minimizes:

• A)both long-run and short-run average total cost.
• B)long-run average total cost only.
• C)short-run average total cost only.
• D)neither long-run nor short-run average total cost.

---

Definitions:

Moral Hazard

The situation in which one party engages in risky behavior or lacks incentive to safeguard the other's interests due to protection against the consequences.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

Quality Communication

The effective and efficient conveyance of information, ensuring clarity, accuracy, and understanding between parties.

Market Signaling

The process by which sellers communicate information to buyers to influence their perceptions and decisions, often related to the quality of a product or service.