A short- run average total cost curve and a long- run average cost curve are tangent
A)when the plant size is at the optimal level for that level of output.
B)where the short- run cost curve is upward sloping.
C)where the short- run cost curve is downward sloping.
D)by coincidence.
E)where the short- run cost curve is downward sloping and the plant size is optimal.

Question

Quizplus · Accepted Answer

When the short-run average total cost is at its minimum point and the long-run average cost curve intersects it at that point, it indicates that the plant size is at the optimal level for that level of production. This means that the firm is producing at the most efficient level possible in the long run.

A Short- Run Average Total Cost Curve and a Long-