The long-run average cost curve defines the minimum average cost of producing alternative levels of output,allowing for optimal selection of:
A) fixed factors of production.
B) variable factors of production.
C) all factors of production.
D) sunk cost factors of production.

Question

Quizplus · Accepted Answer

The long-run average cost curve takes into account all factors of production, both fixed and variable, allowing for optimal selection of the most efficient combination of inputs to minimize costs in the long run. Sunk cost factors, which are costs that cannot be recovered, do not affect long-run average costs as they are irrelevant to future decision-making. Therefore, the best choice is C, all factors of production.

The Long-Run Average Cost Curve Defines the Minimum Average Cost