Suppose a firm produces 50,000 units of output, and determines that its marginal cost is $0.72 and its average total cost is $0.72. At this quantity of output, what is the slope of this firm's long run average total cost curve?
A)Upward-sloping.
B)Downward-sloping.
C)Horizontal.
D)Vertical.

Question

Quizplus · Accepted Answer

When marginal cost equals average total cost, average total cost is at its minimum and the long run average total cost curve is at its lowest point, meaning it is horizontal. When the marginal cost is equal to the average total cost, the average total cost curve is at its minimum point, which means it is flat or horizontal. The slope of the long run average total cost curve at this point is also horizontal. Therefore, the correct answer is choice C, horizontal.

Suppose a Firm Produces 50,000 Units of Output, and Determines