What does a firm's LRAC curve show? How is it related to the firm's short-run ATC curves?
What will be an ideal response?
The long-run average cost curve (LRAC) shows the relationship between the lowest attainable ATC and output when both plant size and labor are varied. The LRAC curve reflects the minimum possible ATC the firm can attain for any given level of output. For any level of output the firm might choose to produce, the LRAC reflects the lowest possible ATC taken from an ATC curve that corresponds to a particular plant size. Once the firm has chosen that plant size, it will incur costs corresponding to the ATC curve associated with that plant size.
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Juicy Couture has been successful in selling women's clothing using an unusual strategy
According to an article in the Wall Street Journal, the key to the firm's strategy is to "limit distribution to maintain the brand's exclusive cachet, even if that means sacrificing sales, a brand-management technique once used only for high-end luxury brands." In 2006, Juicy clothes were sold in only four department stores: Neiman Marcus, Saks, Bloomingdale's, and Nordstrom. In 2006, its sales have more than quadrupled since 2002. Source: Rachel Dodes, "From Track Suits to Fast Track," Wall Street Journal, September 13, 2006. How does limiting the number of stores in which Juicy's products are sold contribute to its success? A) It enables Juicy to price its products at a premium and differentiate them from lower-priced products. B) It helps establish Juicy's products as luxury items favored by the very wealthy. C) By sacrificing sales, the company was able to focus on producing high-quality products. D) Maintaining the exclusivity of a product increases the demand for the product.
In retaliation for U.S. support for Israel during the Arab-Israeli War, OPEC countries stopped selling oil to the United States. For the United States, this embargo caused the
a. demand curve for oil to shift out. b. demand curve for oil to shift in. c. supply curve of oil to shift out. d. supply curve of oil to shift in.