The Point of Tangency Between the Short- Run Average Total

question 37

Multiple Choice

The point of tangency between the short- run average total cost (SRATC) curve and the long- run average cost (LRAC) curve occurs

• A)at a point where average total cost is falling but the marginal cost is rising.
• B)only when the LRAC curve is at its minimum.
• C)at a point where both the average total cost and the marginal cost are rising.
• D)at an output level for which the quantity of the fixed factor is optimal.
• E)at the point of minimum SRATC.

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Definitions:

Price

Price is the amount of money expected, required, or given in payment for something, playing a central role in the economics of market transactions.

Good

An item or product that can be bought, sold, or traded, contributing to an economy's wealth or resources.

Monopsonist

A market condition in which there is only one buyer for a product or service, giving the buyer substantial power over prices.

Maximizing Profit

The process or strategy implemented by a company to ensure that they achieve the highest possible financial gain from their operations, taking into account both revenue and costs.