Refer to Figure 11-10. Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC4. Now, following a permanent change in demand, it plans to cut production to Qc units
What will happen to its average cost of production?
A) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41.
B) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37.
C) In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41.
D) In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37.
A
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