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:

Construction Company

A construction company is a business entity that deals with the building, remodeling, maintenance, and demolition of structures, such as homes, offices, and other buildings, employing a range of skilled and unskilled laborers.

Employee

An individual who is hired to provide services to a company on a regular basis in exchange for compensation.

Fixed

Refers to costs that do not vary with the level of output or production, like rent or salaries.

Long Run

A period in economics in which all factors of production and costs are variable, and firms can adjust all inputs.