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)is attainable if the firm minimizes its costs according to the "principle of substitution."
B)represents unattainable cost levels.
C)may represent actual cost and production levels in the short run.
D)represents less efficient cost levels than points on the long- run average cost curve.
E)is attainable only when all factors are variable.

Question

Quizplus · Accepted Answer

Any point below the LRAC curve represents unattainable cost levels because the LRAC curve shows the lowest possible cost at which a firm can produce any given level of output when all inputs are variable.

Consider the Long- Run Average Cost Curve for a Firm