A slightly different way in which we might model the firm's problem is instead to have them minimize avorogetotalcosts. Let's consider long run planning. The firm is producing widgets. They first decide whether to pay a fixed cost of $100 (a smalt investment) or $200 (a large investrient). If they make the small investment, then total variatie coets for producing widgets are, for each quantity: 1. $300 2. $300 3. $600 If the firm makes the large investment, then total variable costs are instead: 1. $80 2. 5260 3. $430 Notice that when the firm makes a larper investment, their variable costs are always lower than if they had made the smaller investment. If the firm minimizes average total conts, then they make the investment ("small" or "large" but without the quotes) and produce widgots.