A firm's expansion path
A)is the same thing as its long-run average cost curve.
B)is a curve that shows a firm's cost-minimizing combination of inputs for every level of output, holding input prices constant.
C)shows the targeted growth rate in sales over the long run.
D)is a curve that shows expected profits at various price levels.

Question

Quizplus · Accepted Answer

A firm's expansion path is a curve that shows the firm's cost-minimizing combination of inputs for every level of output, holding input prices constant. It is not the same thing as its long-run average cost curve (A), which shows the lowest cost per unit of output achievable when all inputs are varied in the long run. It also does not show the targeted growth rate in sales over the long run (C) or expected profits at various price levels (D).

A Firm's Expansion Path