Asked by marlon moonsammy on Jul 08, 2024

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At an output ________ of a firm's short run average total cost curve, a firm can use its fixed capital input at a lower average cost but only by using its variable input at a higher average cost.

A) beyond the minimum point
B) beyond the maximum point
C) prior to the minimum point
D) equal to the highest level

Short Run

A period during which at least one of a firm's inputs is fixed and cannot be changed.

Average Total Cost

The total cost of production divided by the quantity of output produced, it includes all variable and fixed costs.

Fixed Capital

Long-term assets used in production, such as buildings, machinery, and equipment, which are not easily converted into cash.

  • Acquire an understanding of the linkage between different cost curves in the short run, including average variable cost (AVC), average total cost (ATC), and marginal cost (MC).
  • Acknowledge the significance of reaching the minimum average total cost for the sake of operational efficiency in the short run.
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Verified Answer

MR
Michele RamiirrezJul 10, 2024
Final Answer :
A
Explanation :
At an output beyond the minimum point of a firm's short run average total cost curve, the firm experiences increasing average total costs because it is using its variable inputs (like labor) more intensively, which increases costs at a faster rate than output. This occurs after the firm has already minimized average total costs at the minimum point of the curve.