The long-run supply curve of a firm is ________.

Question

Quizplus · Accepted Answer

In the long run, a firm can choose its level of production and adjust its plant size to minimize costs. Thus, the long-run supply curve of a firm is determined by the minimum point on its average total cost curve. Any portion of the marginal cost curve that lies above the average total cost curve would represent a level of output that is not optimal for the firm to produce in the long run, since it would be more expensive than producing at the minimum point of the average total cost curve. Therefore, the long-run supply curve of a firm is the portion of its marginal cost curve that lies above its average total cost curve.

The Long-Run Supply Curve of a Firm Is ________