Consider the Following Cost Curves for Firm X, a Perfectly

question 45

Multiple Choice

Consider the following cost curves for Firm X, a perfectly competitive firm. FIGURE 9-3
-Refer to Figure 9-3. If Firm X has a capital stock that generates SRATC1, then in the long run FirmX will have to

• A) maintain its output level at Q₁, because it is maximizing its short-run profits.
• B) set its output at Q₁ with an expanded plant size.
• C) set its output at Q₁ with the existing plant size.
• D) expand its output to Q₂ with the existing plant size.
• E) either expand its plant size or exit from the industry.