When the long- run marginal cost is less than the long- run average cost, the long- run average cost slopes_______ and when the long- run marginal cost is greater than the long- run average cost, the long- run average cost slopes _______.

Question

Quizplus · Accepted Answer

When the long- run marginal cost is less than the long- run average cost, the long- run average cost slopes downward because the additional output produced at lower cost reduces the average cost of production. Conversely, when the long- run marginal cost is greater than the long- run average cost, the long- run average cost slopes upward because the additional output produced at higher cost increases the average cost of production.

When the Long- Run Marginal Cost Is Less Than the Long-