Refer to the Long-Run Cost Diagram for a Firm

question 99

Multiple Choice

Refer to the long-run cost diagram for a firm. If the firm produces output Q ₂ at an average cost of ATC ₂, then the firm is

• A)producing the profit-maximizing output but is failing to minimize production costs.
• B)incurring X-inefficiency but is producing that output at which all existing economies of scale might be realized.
• C)incurring X-inefficiency and is failing to produce the output at which all economies of scale might be realized.
• D)producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.

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Definitions:

Glomerulus

A network of tiny blood vessels located within the kidney that filters waste products from the blood to form urine.

Glomerular Capsule

A cup-shaped structure in the kidney that encases the glomerulus and initiates the filtration process of blood.

Efferent Arteriole

A small blood vessel that carries blood away from the glomerulus of the kidney after filtration has occurred.

Peritubular Capillaries

Tiny blood vessels that surround the tubules in the kidney, involved in reabsorption and secretion during urine formation.