Suppose a Firm Has Two Plants Producing the Same Good

question 82

Multiple Choice

Suppose a firm has two plants producing the same good.Each plant is producing 200 units of the good.In plant A,the short run average cost of production is $20 and in plant B it is $30.If the firm wants to produce a total of 400 units at the lowest cost in the long run,it should:

• A)switch production from plant B to plant A until the average cost of production at each plant is the same.
• B)produce only at plant A and shut down plant B.
• C)switch production from plant B to plant A until the average cost is the same at the two plants.
• D)continue to use the same input ratio.

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Definitions:

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