For a typical firm, the long-run average total cost curve:
A) is lower than the short-run average total cost curves.
B) is tangent to each possible short-run average total cost curve at one point.
C) intersects each possible short-run average total cost curve at two points.
D) passes through the minimum points of all possible short-run average variable cost curves.

Question

Quizplus · Accepted Answer

The long-run average total cost curve is the envelope of all the possible short-run average total cost curves. It is tangent to each possible short-run average total cost curve at one point where the short-run cost curve intersects the long-run cost curve. This point represents the minimum average cost for the corresponding level of output in the short run.

For a Typical Firm, the Long-Run Average Total Cost Curve