In the Long Run, a Firm Will Choose a Plant

question 211

Multiple Choice

In the long run, a firm will choose a plant size that has the

• A)minimum of average fixed costs.
• B)capacity to produce the largest quantity of the product.
• C)minimum average total cost of producing the target level of output.
• D)maximum level of resource use per unit of the total product of output.

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Definitions:

Financial Advantage

The benefit of having a stronger financial position or undertaking actions that result in financial gain, such as cost savings or increased revenue.

Cane Juice

A liquid extracted from sugarcane, often used as a sweetener or drink.

Molasses

A thick, dark syrup that is a byproduct of sugar refining, used in baking, as a sweetener, or in the fermentation of alcohol.

Constrained Machine

A piece of equipment within a manufacturing process that limits the total output due to its capacity or throughput level.