Firms achieve productive efficiency in the long run by
A)striving to minimize fixed cost
B)striving to maximize revenue
C)producing at their minimum long-run average cost
D)producing at their minimum long-run marginal cost
E)producing the output consumers want most

Question

Quizplus · Accepted Answer

Long-run average cost (LRAC) is the lowest possible average total cost that a firm can achieve over the long-run when all inputs can be varied. Therefore, when firms produce at their minimum long-run average cost (LRAC), they are achieving productive efficiency. This is because they are producing their output at the lowest cost possible, given the technology and resources available to them.

Firms Achieve Productive Efficiency in the Long Run by