If You Must Determine the Long-Run Equilibrium Output of a Perfectly

question 203

Multiple Choice

If you must determine the long-run equilibrium output of a perfectly competitive firm and you are permitted to see only one curve, which of the following curves is most helpful?

• A)demand 
• B)marginal cost 
• C)average cost 
• D)average fixed cost

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Definitions:

Setup Cost

The expenses incurred to prepare equipment or processes for manufacturing an order or batch of products.

Safety Stock

Additional inventory kept to prevent stockouts caused by fluctuations in demand or supply chain delays.

Reorder Point

A specific stock level that triggers the need to order more inventory to prevent stockouts, calculated by considering the lead time demand and safety stock.