The long- run average cost curve is an envelope curve,with each point associated with a short- run average cost curve
A)crossing that point from above.
B)intersecting that point.
C)lying below it.
D)at its minimum point.
E)tangent at that point.

Question

Quizplus · Accepted Answer

The long-run average cost curve is the envelope curve of all possible short-run average cost curves. As the short-run average cost curves vary, they touch or intersect the long-run average cost curve at different points. The point of tangency occurs where the short-run average cost curve is tangent to the long-run average cost curve. Therefore, the answer is E, which states that the point is tangent at that point.

The Long- Run Average Cost Curve Is an Envelope Curve,with