Figure 11-11 Figure 11-11 Illustrates the Long-Run Average Cost

Figure 11-11 Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATC_a, ATC_b and ATC_c.
-Refer to Figure 11-11. In the short run, if the firm sells fewer than 5,000 picture frames per month

A) it should produce with the scale of operation associated with ATC_a.
B) it should produce with the scale of operation associated with ATC_b.
C) it should produce with the scale of operation associated with ATC_c.
D) it will experience constant returns to scale.

Correct Answer:

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