Use the Figure to Answer the Following Question(s)

question 385

Multiple Choice

Use the figure to answer the following question(s) .
Figure 9-11

Which of the following indicates the firm's profit (or loss) at the profit-maximizing output in Figure 9-11?

• A) profit BCFG
• B) profit OCDM
• C) zero economic profit
• D) loss AEFC

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Definitions:

Long-run Average Total Cost

The average cost per unit of output produced over a period during which all inputs, including capital, are variable.

Diseconomies of Scale

The situation in which a business experiences an increase in average costs per unit when output is increased beyond a certain point.

Economies of Scale

The economic benefits gained by companies because of their large scale of operation, which typically results in a lower cost per unit of output as the scale increases.

Average Fixed Costs

The total fixed costs associated with production (costs that do not change with output) divided by the quantity of output produced.