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Economics (AS & A Level) · Oct / Nov 2022 · Paper 31 · Question 11

9708Types of cost, revenue and profit, short-run and long-run production

The diagram shows a firm producing at Q1 on short-run average cost SRAC1. Which strategy will achieve the greatest reduction in average costs at this output?

  1. Aincreasing its fixed factors of production only
  2. Bincreasing its fixed and variable factors of production
  3. Creducing its fixed factors of production only
  4. Dreducing its fixed and variable factors of production

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Correct answer: B. increasing its fixed and variable factors of production

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