To determine the time period for the given cost profile, we need to analyze the components of the firm's costs:
- ATC (Average Total Cost) = [tex]$10
- AVC (Average Variable Cost) = $[/tex]5
- AFC (Average Fixed Cost) = [tex]$5
- MC (Marginal Cost) = $[/tex]11
### Step-by-Step Solution:
1. Understanding the Cost Components:
- Average Total Cost (ATC): This is the total cost divided by the number of units produced.
- Average Variable Cost (AVC): This is the variable cost divided by the number of units produced.
- Average Fixed Cost (AFC): This is the fixed cost divided by the number of units produced.
- Marginal Cost (MC): This is the cost of producing one more unit of output.
2. Identify Characteristics of the Short Run and Long Run:
- Short Run: In the short run, a firm incurs both fixed and variable costs. There is a fixed cost even when output is zero.
- Long Run: In the long run, all costs are variable. There are no fixed costs because the firm can adjust all inputs. Thus, there is no separate identification of AVC and AFC, only variable costs exist.
3. Examine the Cost Profile:
- The presence of both AVC (Average Variable Cost) and AFC (Average Fixed Cost) indicates that the firm has distinct fixed and variable costs.
- This separation between fixed and variable costs is a hallmark of the short run, where the firm cannot entirely avoid fixed costs.
4. Conclusion:
- Since we observe distinct fixed and variable costs in the cost profile, it is clear that the firm is operating in the short run.
Thus, the time period in which this cost profile is being displayed is:
The Short Run.
