The long-run average cost curve:
A)will rise once the law of diminishing marginal returns begins to apply
B)will fall once the law of diminishing marginal returns begins to apply
C)will rise if increasing returns to scale apply
D)will be vertical if constant returns to scale apply
E)is based on the assumption that all resources are variable

Question

Quizplus · Accepted Answer

The long-run average cost curve is based on the assumption that all resources are variable, allowing firms to adjust all inputs to find the most cost-effective production level.

The Long-Run Average Cost Curve