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hardy7luver hardy7luver
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A year ago

Consider the following cost curves for Firm X, a perfectly competitive firm.

Short description: A graph plots quantity against dollars per unit. Long description: The horizontal axis represents quantity. The vertical axis represents dollars per unit. The graph plots five curves. A large U-shaped curve represents LRAC. It encloses two small U-shaped curves. The first curve on the left represents SRATC subscript 1. The second curve at the center represents SRATC subscript 2. Two concave up increasing curves represent MC subscript 1 and MC subscript 2. MC subscript 1 and SRATC subscript 1 intersect at (Q subscript 1, P subscript 1). LRAC and MC subscript 1 intersect at a point. LRAC, MC subscript 2, and SRATC subscript 2 intersect at (Q subscript 2, P subscript 2).

FIGURE 9-8

Refer to Figure 9-8. If Firm X has a capital stock that generates SRATC1, then in the long run Firm X will have to



▸ expand its output to Q2 with the existing plant size.

▸ set its output at Q1 with the existing plant size.

▸ maintain its output level at Q1, because it is maximizing its short-run profits.

▸ either expand its plant size or exit from the industry.

▸ set its output at Q1 with an expanded plant size.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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jennaforierojennaforiero
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A year ago
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hardy7luver Author
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A year ago
Correct Slight Smile TY
jakechambo3
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Brilliant ツ
jmelchor77
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2 hours ago
Thanks for your help!!
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