Question on: JAMB Economics - 2012
The long-run average cost curve touches to the short-run average cost curves at the
A
minimum points of all short run average cost curves
B
declining points of all short-run average cost curves
C
minimum point of only one of the short-run cost curves
D
rising points of all short-run average cost curves
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Correct Option: D
The long-run average cost curve (LRAC) is an envelope of all the short-run average cost curves (SRAC). It touches the SRAC curves at the points where the firm is operating at its most efficient scale for a given level of output. The LRAC touches the SRAC at the minimum point of only one of the short-run cost curves.
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