Figure 8-10 -Refer to Figure 8-10.Suppose for the Past 8 Years the Past

question 206

Multiple Choice

Figure 8-10

-Refer to Figure 8-10.Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC₄.Now,following a permanent change in demand,it plans to cut production to Qc units.What will happen to its average cost of production?

• A) In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37.
• B) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41.
• C) In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41.
• D) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37.

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