After you have studied Reading Between the Lines on pp. 264-265, answer the following questions.
a. Explain the distinction between the short run and the long run and identify when McDonald’s would want to make each type of change.
b. Given the cost differences between the old and new restaurants described on p. 265, why would it ever be efficient to stick with an old restaurant?
c. Explain economies of scale. Does McDonald’s reap economies of scale in the example on p. 265?
d. Draw a graph to illustrate McDonald’s cost curves if it builds an even larger restaurant than the one whose costs are shown in Fig. 2 on p. 265.