In setting the production level, a firm's cost curves
A)by themselves do not tell us what decisions the firm will make.
B)dictate what decisions the firm will make.
C)have no bearing on what decisions the firm will make.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Cost curves provide information about the costs associated with producing different levels of output, but the firm will ultimately make production decisions based on a variety of factors including market demand, competitor behavior, and other external factors in addition to their own cost structure. Therefore, the cost curves by themselves do not dictate what decisions the firm will make.

In Setting the Production Level, a Firm's Cost Curves