This Figure Shows the Long-Run Average Total Cost Curve for a Firm

question 116

Multiple Choice

This figure shows the long-run average total cost curve for a firm that produces basketballs, along with four short-run average total cost curves. Each of the short-run average total cost curves corresponds to a different plant size. SRATC₁ corresponds to Plant size 1, SRATC₂ corresponds to Plant size 2, and so forth.
FIGURE 7-5

-Refer to Figure 7-5. What is the total cost of producing 500 basketballs per week, assuming the firm uses the optimal plant size for producing that quantity of output?

• A) $500
• B) $5000
• C) $13 500
• D) $22 500

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Definitions:

Interest Rate Risk

The risk of losses due to fluctuations in interest rates that can affect investment values and borrowing costs.

Time To Maturity

The duration until a financial instrument, such as a bond or loan, reaches its due date and the principal must be repaid.

Increases

Describes an upward trend in numerical value or volume.

Bond Ratings

Assessments of the creditworthiness of corporate or governmental bonds, reflecting the issuer's ability to make bond payments, issued by rating agencies.