At quantities greater than the long-run minimum cost per unit of output,the long-run average total cost curve is _____ of the corresponding short-run average total cost curve.
A)tangent to the minimum
B)tangent to the maximum
C)to the right of the minimum
D)to the left of the minimum

Question

Quizplus · Accepted Answer

In the long-run, firms can adjust all inputs and achieve economies of scale up to a certain point. Beyond this point, diseconomies of scale set in, making the long-run average total cost (LRATC) curve to be positioned to the right of the minimum point of the corresponding short-run average total cost (SRATC) curve. This is because, in the long run, firms have adjusted all inputs to minimize costs, and any further increase in output leads to higher per unit costs.

At Quantities Greater Than the Long-Run Minimum Cost Per Unit