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Economics (AS & A Level) · Oct / Nov 2024 · Paper 31 · Question 7

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

The diagram shows the short-run average cost, SRAC, and long-run average cost, LRAC, curves for a firm producing computers. It usually produces 2000 computers per week. An increase in demand requires the firm to produce 3000 computers per week. How much will the average costs change in the long run if the firm makes a permanent decision to produce 3000 computers per week?

  1. A$20
  2. B$40
  3. C$50
  4. D$60

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Correct answer: B. $40

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