In the long run, the total cost of producing any given quantity of output can never be greater than the cost of producing that amount in the short run; therefore, the long-run total cost curve lies _______________________ the short-run total cost curve.
A) below
B) above
C) sometimes above and sometimes below

Question

Quizplus · Accepted Answer

In the long run, all inputs are variable, and the firm can adjust its scale of operation. This means the firm can choose to either increase or decrease production. It may install new machinery or sell some of the existing ones. As a result, the long-run average cost curve is always at the lowest points of each corresponding short-run cost curve. Therefore, the long-run total cost curve lies below the short-run total cost curve.

In the Long Run, the Total Cost of Producing Any