Consider the long-run average cost curve for a firm.Any point representing a cost and output combination that is below the LRAC curve
A)may represent actual cost and production levels in the short run.
B)represents less efficient cost levels than points on the long-run average cost curve.
C)is attainable only when all factors are variable.
D)represents unattainable cost levels,given current technologies.
E)is attainable if the firm minimizes its costs according to the "principle of substitution."

Question

Quizplus · Accepted Answer

In the long run, the LRAC curve represents the lowest possible cost at which a firm can produce any given level of output when all inputs are variable. Any point below this curve is unattainable with current technology, as it would imply producing at a lower cost than the most efficient level possible.

Consider the Long-Run Average Cost Curve for a Firm