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

question 126

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 can be concluded from the information provided in 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 rubber is 4 million pounds.
• 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:

Straight-Line Depreciation

A strategy for apportioning an asset’s price equally over the duration of its usability.

Fiscal Year-End

The completion of a one-year, or 12-month, accounting period, used by governments and businesses for financial reporting and budgeting, which may or may not align with the calendar year.

Quarter Income Statement

A financial report that summarizes the revenues, expenses, and profits or losses of a company over a three-month period.

Impairment Test

An examination to determine if an asset's carrying value exceeds its recoverable amount, indicating if the asset is impaired.