When comparing short-run average total cost with long-run average total cost at a given level of output,
A)short-run average total cost is typically above long-run average total cost.
B)short-run average total cost is typically the same as long-run average total cost.
C)short-run average total cost is typically below long-run average total cost.
D)the relationship between short-run and long-run average total cost follows no clear pattern.

Question

Quizplus · Accepted Answer

Short-run average total cost typically includes variable costs, such as labor and materials, that cannot be adjusted in the short run. This leads to a higher average cost compared to long-run average total cost, which encompasses all costs, including fixed costs that can be adjusted in the long run. Therefore, short-run average total cost is typically above long-run average total cost.

When Comparing Short-Run Average Total Cost with Long-Run Average Total