In Figure 21.4, the long-run average total cost curve is given by the curved line segment
A) ACE.
B) ABFDGE.
C) ABF only.
D) BFD.

Question

In Figure 21.4, the long-run average total cost curve is given by the curved line segment
A) ACE. 
B) ABFDGE. 
C) ABF only. 
D) BFD.

Quizplus · Accepted Answer

The long-run average total cost curve is the lowest possible average total cost for each level of output in the long run. The curved line segment ABFDGE represents the long-run average total cost curve, which includes all possible efficient combinations of inputs, including economies of scale and diseconomies of scale. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect, as none of them represents the entire long-run average total cost curve.