-Refer to Figure 8.6,which shows a firm's short-run average cost curves for three different levels of capital.Which of the following statements about short-run and long-run marginal cost is true?
A) Long-run marginal cost equals short-run marginal cost at 50 units of output
B) Long-run marginal cost equals short-run marginal cost at 130 units of output
C) Long-run marginal cost equals short-run marginal cost at 160 units of output
D) Long-run marginal cost and short-run marginal cost are never equal

Question

-Refer to Figure 8.6,which shows a firm's short-run average cost curves for three different levels of capital.Which of the following statements about short-run and long-run marginal cost is true?
A) Long-run marginal cost equals short-run marginal cost at 50 units of output 
B) Long-run marginal cost equals short-run marginal cost at 130 units of output 
C) Long-run marginal cost equals short-run marginal cost at 160 units of output 
D) Long-run marginal cost and short-run marginal cost are never equal

Quizplus · Accepted Answer

In the long run, firms can adjust all inputs, so the long-run marginal cost (LRMC) equals the short-run marginal cost (SRMC) at the output level where the firm is using the optimal level of capital for that output, which is typically at the minimum point of the short-run average cost curve.