-In Figure 21.4,the long-run average total cost curve is given by the curved line segment

Question

Quizplus · Accepted Answer

The long-run average total cost (LRATC) curve shows the lowest average total cost that a firm can achieve in the long run for each level of output. In Figure 21.4, the curved line segment ABFDGE represents the LRATC curve because it shows the minimum average total cost for all levels of output beyond a certain point. Points to the left of point A are not feasible for the firm to produce in the long run, while points to the right of point E are not yet optimal in terms of achieving the lowest average total cost. Therefore, the LRATC curve is represented by the curved line segment ABFDGE.