Use the following statements to answer this question: I. The long-run average cost (LAC) curve is the envelope of the short-run average cost (SAC) curves.
II) The long-run marginal cost (LMC) curve is the envelope of the short-run marginal cost (SMC) curves.
A) I and II are true.
B) I is true and II is false.
C) II is true and I is false.
D) I and II are false.

Question

Quizplus · Accepted Answer

The LAC curve is indeed the envelope of the SAC curves, showing the lowest cost at which any output level can be produced after all inputs are variable. However, the LMC curve intersects the SAC and SMC curves at their minimum points, not enveloping them.

Use the Following Statements to Answer This Question: I