A firm never operates:
A) at the minimum of its ATC curve.
B) at the minimum of its AVC curve.
C) on the downward-sloping portion of its ATC curve.
D) on the downward-sloping portion of its AVC curve.
E) on its long-run marginal cost curve.

Question

Quizplus · Accepted Answer

A firm operates where marginal revenue equals marginal cost, but it will never operate on the downward-sloping portion of its AVC curve because that would mean producing output at a cost that exceeds revenue, which would result in losses.

A Firm Never Operates