At the long-run quantity of output, where the LRAC curve is at its lowest point, it is tangent to the ________ of the corresponding short-run average total cost curve.
A) minimum
B) maximum
C) right of the minimum
D) left of the minimum

Question

Quizplus · Accepted Answer

When the LRAC curve is at its lowest point, it represents the minimum possible cost of producing a given quantity of output in the long run. At this point, the firm has optimized its use of all inputs, including capital, labor, and technology. The corresponding short-run average total cost curves will intersect the LRAC curve at this point, and the curve that is tangent to the LRAC curve will represent the minimum point of that short-run ATC curve. Therefore, the correct answer is A), minimum.

At the Long-Run Quantity of Output, Where the LRAC Curve