In Figure 21.4, the long-run average total cost curve is given by the curved line segment
A) ACE.
B) ABFDGE.
C) ABF only.
D) BFD.

Question

In Figure 21.4, the long-run average total cost curve is given by the curved line segment
A) ACE. 
B) ABFDGE. 
C) ABF only. 
D) BFD.

Quizplus · Accepted Answer

The long-run average total cost curve is the envelope of all the short-run average total cost curves, and it is given by the lowest points of each short-run average total cost curve. In the graph, the lowest points of each curve fall on the line ABFDGE, and therefore this is the long-run average total cost curve.