Use the Following Graph to Answer the Following Questions

question 13

Multiple Choice

Use the following graph to answer the following questions.

-A firm expands its scale of production and finds that its long-run average total cost curve looks like LRATC1.It might look this way because the firm

• A) adds several additional layers of management,which increase its costs.
• B) is able to pay its employees more.
• C) has to pay higher rent.
• D) is able to negotiate lower prices with its suppliers.
• E) is able to sell more output.

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Definitions:

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Line of Credit

A Line of Credit is a flexible loan from a bank or financial institution allowing the borrower to draw funds up to a specified limit at any time.

Economic Reasons

Factors or situations related to the structure and functioning of the economy that influence decisions and behaviors.

Holding Cash

The practice of keeping liquid assets on hand for transactional purposes or as a precaution against unforeseen expenses.