A firm always operates at some point on its long-run average total cost curve in both the long run and the short run.

Question

Quizplus · Accepted Answer

In the short run, a firm may operate at any point on its short-run average total cost curve, which may not coincide with its long-run average total cost curve due to fixed factors of production. In the long run, all factors are variable, allowing the firm to adjust its production to operate on the long-run average total cost curve.

A Firm Always Operates at Some Point on Its Long-Run