The long-run average cost curve
A)is a composite of short-run AC curves.
B)shows the lowest possible short-run AC corresponding to each output level.
C)depends on the firm's planning horizon.
D)All of the responses are correct.

Question

Quizplus · Accepted Answer

The long-run average cost curve is indeed a composite of short-run average cost (AC) curves, showing the lowest possible short-run AC for each output level, and it varies based on the firm's planning horizon. This curve reflects the most cost-efficient way to produce any given level of output in the long run, when all inputs are variable.

The Long-Run Average Cost Curve