A firm's long- run average cost curve
A) shows the relationship between marginal cost and output given that the economically most efficient method of production is employed.
B) is an envelope of short- run average variable cost curves.
C) shows the minimum cost of producing each possible level of output with a fixed factor.
D) is the boundary between attainable and unattainable cost levels, with known production technologies and given factor prices.
E) is horizontal in most situations..

Question

Quizplus · Accepted Answer

The long-run average cost curve represents the lowest possible cost of producing each level of output when all inputs are variable, serving as a boundary between attainable and unattainable cost levels with given technologies and factor prices.

A Firm's Long- Run Average Cost Curve