The long-run average cost curve shows
A)the lowest average cost of producing every level of output in the long run.
B)where the most profitable level of output occurs.
C)the average cost of producing where diminishing returns are not present.
D)the plant size or scale that the firm should build.

Question

Quizplus · Accepted Answer

The long-run average cost curve shows the lowest average cost of producing every level of output in the long run. This is because in the long run, firms have the flexibility to adjust their plant size and technology to minimize costs and maximize efficiency. Therefore, the LRAC curve is a reflection of the most efficient way to produce at each level of output in the long run.

The Long-Run Average Cost Curve Shows