The following graph shows the short-run average total cost curves and the long-run average total cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (ATC ) and the long-run average total cost curve ( LRATC ); for example, Q1 marks the point of tangency between ATC1 and LRATC. The orange point on ATC1 indicates the firm's current output level in the short run (Q2 ). ATC, ATC LRATO ATC, ATC, ATC, 3D 3D %3D OUTPUT In the long run, if the firm decides to keep output at its initial level, what will it likely do? o Stay on ATCı but decrease to the point touching LRATC Shut down o Shift to operate on ATC2 o Shift to operate on ATC3 True or False: The minimum efficient scale is achieved at the minimum point on each average total cost curve. False True COST PER UNIT

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Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.