The long-run average cost (LRAC) curve shows:
A) the firm's cost per unit at each level of output.
B) the firm's average of total fixed and total variable costs at each level of output.
C) the firm's total variable costs averaged for each level of input.
D) the firm's total cost at each level of output.

Question

Quizplus · Accepted Answer

The long-run average cost curve shows the firm's cost per unit at each level of output, which includes all costs (fixed and variable) in the long run. It is a U-shaped curve that shows the minimum efficient scale (MES) and economies and diseconomies of scale.

The Long-Run Average Cost (LRAC) Curve Shows