Asked by Hallie Adair on Jul 30, 2024
Verified
As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.
Long-Run Average Cost Curve
A graphical representation showing the lowest possible cost per unit that can be achieved for any given level of production when all factors of production are variable.
- Differentiate between short-term and long-term intervals in terms of production and expenses.
- Comprehend how the adjustment of production scales affects long-run average cost.
Verified Answer
ZK
Zybrea KnightAug 05, 2024
Final Answer :
True
Explanation :
In the long run, all factors of production are variable, allowing firms to adjust the size of their factories (or other capital inputs) to achieve the most efficient level of production for any given quantity, which is represented by moving along the long-run average cost curve.
Learning Objectives
- Differentiate between short-term and long-term intervals in terms of production and expenses.
- Comprehend how the adjustment of production scales affects long-run average cost.