Question

Each​ short-run average total cost curve is _______________to the LRAC curve at some point.T he LRAC curve shows the lowest possible cost of producing any output when all factors are ____________.

.The SRATC curve shows the lowest possible cost of producing any output when one or more factors are _________ A. perpendicular, fixed, variable
B. tangent, variable, fixed
C. parallel, fixed, variable
D. intersecting, variable, fixed

Answer 1

The short-run average total cost (SRATC) curve represents the lowest possible cost of producing any output when one or more factors are fixed. Meanwhile, the long-run average cost (LRAC) curve represents the lowest possible cost of producing any output when all factors are variable. The SRATC curve is tangent to the LRAC curve at some point.

Step-by-step explanation:

The correct answer is B. tangent, variable, fixed.

The short-run average total cost (SRATC) curve represents the lowest possible cost of producing any output when one or more factors are fixed. Meanwhile, the long-run average cost (LRAC) curve represents the lowest possible cost of producing any output when all factors are variable. At some point, the SRATC curve is tangent to the LRAC curve, which indicates that the firm has reached the optimal combination of inputs and has achieved the lowest possible average cost of production.