Figure 11-10 -Refer to Figure 11-10.Suppose for the Past 8 Years the Past

Multiple Choice

Figure 11-10

-Refer to Figure 11-10.Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC₄.Now, following a permanent change in demand, it plans to cut production to Qc units.What will happen to its average cost of production?

A) In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37.
B) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41.
C) In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41.
D) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37.