Which of the following statements is (are) TRUE?
A) Short-run average total cost curves intersect the long-run average total cost curve at its minimum point.
B) It is not possible for two short-run average total cost curves to cross.
C) The long-run average total cost curve is derived by tracing out the lower envelope of the firm's short-run average total cost curves.
D) The long-run average total cost curve indicates that it is more costly to produce output in the long run, especially when input prices are rising because of inflation.

Question

Quizplus · Accepted Answer

The long-run average total cost curve is indeed derived by tracing out the lower envelope of a firm's short-run average total cost curves, which represents the lowest cost at which a firm can produce any given level of output in the long run, when all inputs are variable.

Which of the Following Statements Is (Are) TRUE