Figure 711 Figure 7

question 49

Multiple Choice

Figure 7.11 Figure 7.11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATC_a, ATC_b and ATC_c.
-Refer to Figure 7.11.For output rates greater than 20 000 picture frames per month,

• A)the firm will not make a profit because the average cost of production will be too high.
• B)the firm will experience diseconomies of scale.
• C)the firm will experience diminishing returns.
• D)the short-run average total cost will equal the long-run average total cost of production.

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Definitions:

Discount Period

The time frame between the issuance of a bill or an invoice and its due date, often associated with a discount offered for early payment.

FOB Shipping Point

A shipping term indicating that the buyer takes responsibility for the goods and covers shipping costs from the point of departure.

Debit Memo

A document issued by a buyer to a seller to correct errors, reduce amounts owed, or return funds in the case of an overpayment.

Perpetual Inventory System

An inventory management system where updates are made continuously as transactions occur, keeping a real-time track of inventory levels.