Figure 10.17 -Refer to Figure 10.17.In the Long Run, Why Will the Why

question 249

Multiple Choice

Figure 10.17
-Refer to Figure 10.17.In the long run, why will the firm produce Q_f units and not Q_g units, which has a lower average cost of production?

• A)Although its average cost of production is lower when the firm produces Q_g units, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss.
• B)At Q_g, average cost exceeds marginal cost so the firm will actually incur a loss.
• C)At Q_g, marginal revenue is less than average revenue, which will result in a loss for the firm.
• D)The firm's goal is to charge a high price and make a small profit rather than charge a low price and make no profit.

---

Definitions:

Inventory Period

The average time it takes for inventory to be sold and replaced over a period, a key component of efficiency in supply chain management.

Accounts Payable Period

The average duration it takes for a company to pay off its suppliers after receiving goods or services.

Accounts Receivable Period

The mean duration that a company requires to receive payments from credit sales, reflecting the effectiveness of its policies on credit and collections.

Operating Cycle

The period of time between the acquisition of inventory by a company and the receipt of cash from accounts receivable from the sale of that inventory.