The Point of Tangency Between the Short- Run Average Total

question 31

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

---

Definitions:

Price Discrimination

A pricing strategy that sells the same product or service at different prices to different customers, often based on willingness to pay, market segment, or purchase volume.

Less Elastic

Describes a demand that is relatively unresponsive to changes in price, indicating that consumers' buying habits do not significantly alter with price fluctuations.

More Elastic

Describes demand that is highly sensitive to changes in price, where consumers significantly alter their quantity demanded with slight price variations.

Price-Discriminating Firm

A company that engages in the practice of charging different prices for the same product in different markets or segments.