The following graph depicts the various cost curves for a representative competitive firm producing quantity Q1:

-Refer to the above graph to answer this question.If the price of the product is P1,what does the graph suggest?
A)The firm is operating from the optimal size plant but is not necessarily producing the optimal output.
B)The firm is producing the optimal output but is not necessarily operating from the optimal size plant.
C)The firm is neither operating from the optimal size plant nor necessarily producing the optimal output.
D)The firm is producing the optimal output and is also operating from the optimal size plant.

Question

The following graph depicts the various cost curves for a representative competitive firm producing quantity Q1:
 
-Refer to the above graph to answer this question.If the price of the product is P1,what does the graph suggest?
A)The firm is operating from the optimal size plant but is not necessarily producing the optimal output. 
B)The firm is producing the optimal output but is not necessarily operating from the optimal size plant. 
C)The firm is neither operating from the optimal size plant nor necessarily producing the optimal output. 
D)The firm is producing the optimal output and is also operating from the optimal size plant.

Quizplus · Accepted Answer

The Answer of The following graph depicts the various cost curves for a representative competitive firm producing quantity Q1:
 
-Refer to the above graph to answer this question.If the price of the product is P1,what does the graph suggest?
A)The firm is operating from the optimal size plant but is not necessarily producing the optimal output. 
B)The firm is producing the optimal output but is not necessarily operating from the optimal size plant. 
C)The firm is neither operating from the optimal size plant nor necessarily producing the optimal output. 
D)The firm is producing the optimal output and is also operating from the optimal size plant.

The Following Graph Depicts the Various Cost Curves for a Representative