Below Is Short-Run Cost Data for Four Different Plant Sizes

question 87

Multiple Choice

Below is short-run cost data for four different plant sizes.Plant 2 has exactly twice as many inputs as does Plant 1.Plant 3 has exactly three times as many inputs as does Plant 1 and Plant 4 has exactly four times as many inputs as does Plant 1.

-Refer to the information above to answer this question.If the firm is currently producing an output of 20 using Plant 1 and it decides to build Plant 2,what will happen to its short-run average cost if its output remains unchanged?

• A)It will remain unchanged.
• B)It will rise by $3.
• C)It will fall by $3.
• D)It will fall by $11.
• E)It will rise by $11.