The long-run average cost curve is tangent to the short-run average total cost curve at the minimum point of the short-run average total cost curve when the:
A) long-run average cost curve is downward-sloping.
B) long-run average cost curve is upward-sloping.
C) firm is experiencing constant returns to scale.
D) firm is experiencing economies of scale.

Question

Quizplus · Accepted Answer

The long-run average cost curve is tangent to the short-run average total cost curve at the minimum point of the short-run average total cost curve when the firm is experiencing constant returns to scale, indicating that the firm is operating at its most efficient scale.

The Long-Run Average Cost Curve Is Tangent to the Short-Run