The Following Figure Shows the Long-Run Average Cost Curve for a Tire

question 58

Multiple Choice

The following figure shows the long-run average cost curve for a tire manufacturer and the long-run average cost curve for a rubber producer. Which of the following is indicated by the figure given below?​ ​
Figure 14.1
​

• A)The cost of producing rubber is much lower than the cost of producing tires.
• B)The total cost of producing 100,000 tires is greater than the total cost of producing 200,000 tires.
• C)The minimum efficient scale of producing tires is 200,000 tires.
• D)The minimum efficient scale of producing tires is greater than 200,000 tires.
• E)The marginal cost of producing the 200,000th tire must exceed the average cost of 200,000 tires.

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Definitions:

Real GDP

Real Gross Domestic Product (GDP) measures the value of all finished goods and services produced within a country's borders, adjusted for inflation, within a specific time period.

Price Level

The averaged-out price for the total spectrum of goods and services in the economy.

Nominal Wage

The wage paid to workers stated in current money terms, without adjustment for inflation.

Real Wage

The purchasing power of an individual's income, accounting for inflation and reflecting how many goods and services can be bought.