Exhibit 6-17 Long-run average cost curve

-Given the short-run average total cost curves in Exhibit 6-17,what level of output per week minimizes average total cost?

Question

Exhibit 6-17 Long-run average cost curve
 
-Given the short-run average total cost curves in Exhibit 6-17,what level of output per week minimizes average total cost?

Quizplus · Accepted Answer

To minimize average total cost, we need to produce at the point where the short-run average total cost curve is at its lowest point. This occurs at the minimum point of the long-run average cost curve. From the graph, we can see that the long-run average cost curve is U-shaped, with its minimum point between Q₂ and Q₃. Therefore, the level of output per week that minimizes average total cost is Q₂ units.

Exhibit 6-17 Long-Run Average Cost Curve