The lowest cost per unit at each level of output, assuming all factors of production are variable, is the:
A) long-run average cost curve.
B) marginal cost curve.
C) average variable cost curve.
D) average total cost curve.

Question

Quizplus · Accepted Answer

The long-run average cost curve represents the lowest possible average cost per unit at each level of output when all factors of production are variable. This is because in the long run, a firm can adjust all factors of production to minimize costs and achieve economies of scale. Marginal cost, average variable cost, and average total cost curves may be useful in analyzing short-term production decisions, but they do not capture the long-run cost structure of a firm.

The Lowest Cost Per Unit at Each Level of Output