The long-run average total cost curve is constructed from the

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Quizplus · Accepted Answer

The long-run average total cost curve is the envelope of all the short-run average total cost curves, representing the lowest average total cost for producing each level of output in the long run. This is because in the long run, all inputs are variable and firms are able to make adjustments to their production processes to minimize costs. Therefore, option C is correct as it represents the correct explanation of the construction of the long-run average total cost curve.  Option A deals with short-run marginal cost, which is not relevant to the construction of the long-run average total cost curve. Option B deals with short-run average variable cost curves, which is also not relevant to the construction of the long-run average total cost curve.

The Long-Run Average Total Cost Curve Is Constructed from the