Economics 9708 · AS & A Level · 7.5

7.5 — practice question

The diagram illustrates the short-run average cost, SRAC, and long-run average cost, LRAC, curves for a firm that manufactures computers. In normal conditions, it makes 2000 computers per week. Because demand rises, the firm must increase output to 3000 computers per week. By how much will the average costs alter in the long run if the firm decides permanently to produce 3000 computers per week?

  • A$20
  • B$40
  • C$50
  • D$60

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