When the long-run average cost is minimum,the long-run marginal cost:
A)is also at its lowest value.
B)is decreasing.
C)is greater than long-run average cost.
D)is at its highest value.
E)is equal to long-run average cost.

Question

Quizplus · Accepted Answer

When the long-run average cost is at its minimum, it means that the firm has achieved economies of scale and is producing at the most efficient level. At this point, the long-run marginal cost is equal to the long-run average cost. If it was higher, the average cost would be increasing, and if it was lower, the average cost would be decreasing. Therefore, the correct answer is E, long-run marginal cost is equal to long-run average cost.

When the Long-Run Average Cost Is Minimum,the Long-Run Marginal Cost