Question: The graph below includes two plant sizes as illustrated by AC , and AC 2. Cost ACI AC2 ACT ACZ LRAC 01 02 Output per

 The graph below includes two plant sizes as illustrated by AC

, and AC 2. Cost ACI AC2 ACT ACZ LRAC 01 02

The graph below includes two plant sizes as illustrated by AC , and AC 2. Cost ACI AC2 ACT ACZ LRAC 01 02 Output per time period Refer to the graph above to answer this question. If the firm is producing in a plant with AC , as its short run average cost curve, and a small market is limiting the firm's output to Q 1, which of the following statements is true? O a. The firm would benefit from a larger market because it could build a larger plant, capture economies of scale and achieve economic capacity. O b. Building a larger plant would lower the firm's average cost of producing Q 10. O c. Increasing the output in the current plant size would not lower the short-run average cost. O d. The firm would benefit from a larger market because it could build a larger plant and capture economies of scale, but it still would not be able to achieve economic capacity

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