Given the following production function for a train engine manufacturing company, at what point (or points) should the firm produce?
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A
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B & E
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E & D
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D
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Given the graph shown here, when is the firm operating at a short run loss?
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Between Q1 and Q2
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At Q2
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At Q1
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When MC (the purple line) is greater than Q1
Homework Answers
The firm should produce at Q1.
Explanation
At Q1, MC=AC. At this production level and price the costs are being recovered by the firm
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