Long-run average cost equals long-run marginal cost whenever:
A) the production function exhibits constant returns to scale.
B) fixed costs are zero.
C) no factor always has increasing marginal returns.
D) the cost of capital is near zero.
E) long-run marginal cost is at its minimum.

Question

Quizplus · Accepted Answer

Long-run average cost only equals long-run marginal cost when the production function exhibits constant returns to scale. In this case, changes in output do not affect the average cost, only the marginal cost. Options B, C, D, and E do not ensure the conditions where the long-run average cost equals the long-run marginal cost.

Long-Run Average Cost Equals Long-Run Marginal Cost Whenever