Exhibit 7-15 Long-run average cost

Given the short-run average total cost curves in Exhibit 7-15, what level of output per week minimizes average total cost?
A) 500 units.
B) 1,000 units.
C) 1,500 units.
D) 2,000 units.

Question

Exhibit 7-15 Long-run average cost

Given the short-run average total cost curves in Exhibit 7-15, what level of output per week minimizes average total cost?
A) 500 units. 
B) 1,000 units. 
C) 1,500 units. 
D) 2,000 units.

Quizplus · Accepted Answer

The level of output per week that minimizes average total cost is where the short-run marginal cost curve intersects the short-run average total cost curve at its lowest point. This occurs at approximately 1,000 units in Exhibit 7-15.

Exhibit 7-15 Long-Run Average Cost