The Graph Below Includes Two Plant Sizes as Illustrated by AC₁

question 90

Multiple Choice

The graph below includes two plant sizes as illustrated by AC₁ and AC₂.

-Refer to the graph above to answer this question.All of the following statements except one are correct if a small market limits a firm's output to Q₁.Which is the exception?

• A)The firm is not achieving capacity output in plant 1.
• B)The firm is not achieving minimum efficient scale.
• C)The firm is experiencing excess capacity.
• D)The firm would benefit from a larger market.
• E)Building a larger plant would lower the firm's average cost of producing Q₁.

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Definitions:

Correlation Coefficients

A statistical measure that indicates the extent to which two or more variables fluctuate together. A positive correlation indicates a direct relationship, while a negative correlation indicates an inverse relationship.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases, and vice versa.

Positive Correlation

A relationship between two variables where they move in the same direction, indicating that as one variable increases, so does the other.

Criterion-related Validity

The extent to which a test successfully measures an operational variable and can predict a criterion or outcome.