Figure 711 Figure 7

Multiple Choice

Figure 7.11 Figure 7.11 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 7.11.In the short run, if the firm sells fewer than 5000 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.