A firm's long-run average cost curve
A)shows the minimum cost of producing each possible level of output with a fixed factor.
B)shows the relationship between marginal cost and output given that the economically most efficient method of production is employed.
C)is the boundary between attainable and unattainable cost levels,with known production technologies and given factor prices.
D)is horizontal in most situations.
E)is an envelope of short-run average variable cost curves.

Question

Quizplus · Accepted Answer

The long-run average cost curve represents the lowest possible cost at which any given level of output can be produced when all inputs are variable, serving as a boundary between attainable and unattainable cost levels with current technology and factor prices.

A Firm's Long-Run Average Cost Curve