A Short-Run Average Cost Curve Is Tangent to the Long-Run

question 28

Multiple Choice

A short-run average cost curve is tangent to the long-run average cost curve at the quantity where:

• A) the fixed plant size would have been optimal.
• B) short-run marginal cost is minimized.
• C) short-run marginal cost is equal to average cost.
• D) short-run average cost is minimized.
• E) long-run average cost is minimized.

---

Definitions:

Multiplier

An economic factor that quantifies the effect of a change in one economic variable on another, for instance, how government spending affects national income.

Dollars

The official currency of the United States, also widely used as a benchmark and reserve currency globally.

Risk-free Rates

The expected profit from an investment that carries no risk of losing money, often linked to government securities.

Spot Exchange Rate

The current rate for instant purchase or sale of a currency in the exchange market.