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

Question

Quizplus · Accepted Answer

The long-run average cost curve represents the lowest cost at which a firm can produce any given level of output when all inputs are variable, typically resulting in a U-shape due to economies and diseconomies of scale. It also guides the firm in choosing the optimal plant size and labor quantity to minimize costs.

A Firm's Long-Run Average Cost Curve