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Question 4 Costs per ATC, unit ATCA ATC5 $55 47 41 37 Qa Qd Quantity of output Suppose for the past 8 years the firm has been producing Od units per period using plant size 4TC4. Now, following a permanent change in demand, it plans to cut production to Oc units. What will happen to its average cost of production? A) In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37. B) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41. C) In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41. D) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37.Question I The price elasticity of the supply of teenage labor services is approximately 1.36. Suppose the minimum wage rises from $7.25 per hour to $8.75. Using the midpoint formula, what is the approximate change in the quantity of teenage labor supplied? A) 7.3 percent B) 14.4 percent C) 25.5 percent D) There is insufficient information to answer the question. Question 2 When interest rate decreases, which of the following is false? A) Long run average total cost curve shifts downward. B) Long run marginal cost curve shifts downward. C) Short run average variable costs curve shifts downward. D) Both B and C. Question 3 Good Income Own price Cross price elasticity of demand for good elasticity elasticity X with respect to the price of good Y X 0.5 0.5 - 0.5 Y -1.5 1.5 Refer to the table below, good X is good Y is and good X and Y are A) a luxury good; price elastic; complementary goods an inferior good; price inelastic; substitute goods C) a necessity good; price elastic; substitute goods " D) a necessity good; price elastic; complementary goods