Question

Refer to the figure on the right. Suppose the output of a large aluminum firm drops from 1 million pounds to 0.5 million pounds per year. The long-run average cost of producing aluminum will go from $ to $ (Enter your responses rounded to the nearest penny.) $2.80f 2.10 с ь Cost per pound LAC 0.50 1.00 1.50 2.00 2.50 Million of pounds of Aluminum per year

Answer 1

Answer : In case of 1 million pounds of aluminum per year production LAC is $2.10. In case of 0.5 million pounds of aluminum per year production LAC is $2.80.

So, if the output level decrease from 1 million pounds to 0.5 million pounds per year then the long-run average cost (LAC) go from $2.10 to $2.80 .