A firm is producing output less than the output associated with the minimum point on the firm's short run average variable cost curve. At this level of output the firm uses its fixed capital input ________ and its variable labor input ________.
A) efficiently; efficiently
B) efficiently; inefficiently
C) inefficiently; efficiently
D) inefficiently; inefficiently

Question

Quizplus · Accepted Answer

Producing output less than the output at the minimum point on the short run average variable cost curve indicates inefficiency in the use of both fixed capital (since the firm is not achieving economies of scale) and variable labor (since the average variable cost is not minimized).

A Firm Is Producing Output Less Than the Output Associated