A firm's long- run average cost curve
A) tells the firm which plant size to use and which quantity of labour to use to minimise the cost of producing any level of output.
B) is U- shaped.
C) shows the lowest attainable average total cost of producing any level of output when the plant and labour are variable.
D) All of the above.

Question

Quizplus · Accepted Answer

All of the options correctly describe aspects of a firm's long-run average cost curve. It informs the firm about the most cost-efficient plant size and labor quantity (A), is typically U-shaped due to economies and diseconomies of scale (B), and illustrates the lowest possible average total cost for any output level when both plant size and labor are variable (C).

A Firm's Long- Run Average Cost Curve