The long-run average cost curve is at a minimum at a level of output where
A) the firm is experiencing constant returns to scale.
B) it is equal to long-run marginal cost.
C) the long-run average cost curve is tangent to the lowest point on a short-run average total cost curve.
D) all of the above occur.

Question

Quizplus · Accepted Answer

The long-run average cost curve is at its minimum where the firm experiences constant returns to scale, it is equal to the long-run marginal cost, and it is tangent to the lowest point on a short-run average total cost curve. These conditions reflect the most efficient scale of operation for a firm in the long run.

The Long-Run Average Cost Curve Is at a Minimum at a Level