A long-run ATC curve shows:

Question

Quizplus · Accepted Answer

The long-run average total cost (ATC) curve represents the minimum average cost at which a firm can produce any given level of output in the long run, when all inputs are variable. It shows the most efficient scale of operation for a firm by indicating at which point the firm can achieve economies of scale, minimize costs, and determine the optimal size. Thus, it encompasses all the options provided: the minimum average total cost across different firm sizes, the firm size that can achieve the lowest costs per unit, and the ability of firms to capture economies of scale through expansion.

A Long-Run ATC Curve Shows