The locus of points representing the minimum unit cost of producing any given rate of output is the
A) short-run average total cost curve.
B) long-run marginal cost curve.
C) short-run total cost curve.
D) long-run average cost curve.

Question

Quizplus · Accepted Answer

The long-run average cost (LRAC) curve is the locus of points representing the minimum unit cost of producing any given rate of output. This curve takes into account all the possible combinations of inputs and technological options available to the firm in the long run. In contrast, the short-run curves (average total cost, total cost, and marginal cost) only depict the costs of a fixed plant size and cannot capture the benefits of adjusting the scale of production or adopting new technologies in the long run.

The Locus of Points Representing the Minimum Unit Cost of Producing