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dbomb1 dbomb1
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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 is producing output Q1 and the market price is P1,



▸ there is no lower-cost scale of plant which could be built by Firm X.

▸ there are profits to induce increases in output by Firm X, using its existing plant.

▸ new firms have a profit incentive to enter the industry, building larger plants.

▸ Firm X is producing at its minimum efficient scale.

▸ Firm X is at its long-run profit-maximizing position.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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boomers1234boomers1234
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dbomb1 Author
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A year ago
Thank you, thank you, thank you!
kamikazekota
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Yesterday
Good timing, thanks!
Jadakiss
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2 hours ago
Correct Slight Smile TY
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