Figure: Long-Run and Short-Run Average Cost Curves

question 221

Multiple Choice

Figure: Long-Run and Short-Run Average Cost Curves
(Figure: Long-Run and Short-Run Average Cost Curves) Look at the figure Long-Run and Short-Run Average Cost Curves.If a firm faced the long-run average total cost curve shown in the figure and it expected to produce 100,000 units of the good in the long run, the firm should build the plant associated with:

• A)ATC1.
• B)ATC2.
• C)ATC3.
• D)ATC1 or with ATC2.

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Definitions:

Rights Offering

A way companies raise capital, where existing shareholders are given the right to purchase additional shares at a discount before the new shares are offered to the public.

Subscription Price

The price at which existing shareholders can purchase additional shares of stock in a company, often at a discount from the current market price.

Ownership Percentage

The fraction or percentage of a company that is owned by an individual or entity, typically expressed as a share of the company's total equity.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings.