Graph 13-6 This graph depicts average total cost functions for a firm that produces automobiles.Use the graph to answer the following question(s).
-Refer to Graph 13-6.If the firm is currently operating on ATCB, what options does it have if it wants to change its level of automobile production over the next couple of weeks?
A)The firm has no options.It cannot change output level in the short run.
B)it can operate at any level of output between points M and N
C)it can operate at any level of output, as long as it stays on ATCD
D)it can operate at any level of output as long as it stays on ATCB

Question

Graph 13-6  This graph depicts average total cost functions for a firm that produces automobiles.Use the graph to answer the following question(s).
-Refer to Graph 13-6.If the firm is currently operating on ATCB, what options does it have if it wants to change its level of automobile production over the next couple of weeks?
A)The firm has no options.It cannot change output level in the short run. 
B)it can operate at any level of output between points M and N 
C)it can operate at any level of output, as long as it stays on ATCD 
D)it can operate at any level of output as long as it stays on ATCB

Quizplus · Accepted Answer

The firm can operate at any level of output as long as it stays on the ATCB curve. This is because ATCB represents the firm's current short-run average total cost curve, which means that it has already incurred all of its fixed costs and can vary its output level by adjusting its variable inputs. Any change in output level beyond the ATCB curve would require the firm to incur additional fixed costs, which it cannot do in the short run. Therefore, the best option for the firm is to operate at any level of output on the ATCB curve.

Graph 13-6 This Graph Depicts Average Total Cost Functions