In the short- run, if a firm is minimizing costs at its current output level, then the firm is operating at a point along the long- run average cost curve.

Question

Quizplus · Accepted Answer

In the short run, a firm can only adjust its variable inputs, such as labor and materials. In the long run, a firm can adjust all of its inputs, including its capital stock. Therefore, in the long run, a firm can achieve a lower cost of production than in the short run. The long-run average cost curve is the locus of all points that represent the minimum cost of producing a given output level. Therefore, if a firm is minimizing costs at its current output level, then the firm is operating at a point along the long-run average cost curve.

In the Short- Run, If a Firm Is Minimizing Costs