Question

Long-run average cost curve is a curve that shows the​ _____ average total cost at which it is​ _____ to produce each output when the firm has had sufficient time to change both its plant size and labor employed.
a. ​lowest; possible
b. ​lowest; not
c. ​highest; possible
d. ​highest; not possible

Answer 1

In the Short-Run (SR) it is not possible to change the production plan. However, in the Long-Run (LR), since we have more time we can change the production plan. It means in the LR, we can minimize the Average Total Cost. It is going to be the lowest ATC.