The correct answer is: A. LAC is minimum.
The long-run average cost (LAC) curve is the lowest cost per unit of output that a firm can achieve in the long run, when all inputs are variable. The LAC curve is U-shaped, which means that it first falls as output increases, reaches a minimum point, and then rises as output increases further. The minimum point on the LAC curve is the most efficient scale of production for the firm.
The short-run average cost (SAC) curve is the average cost per unit of output that a firm can achieve in the short run, when some inputs are fixed and some inputs are variable. The SAC curve is always U-shaped, regardless of the firm’s scale of production.
The long-run marginal cost (LMC) curve is the change in the firm’s total cost as it produces one more unit of output in the long run, when all inputs are variable. The LMC curve is always U-shaped, regardless of the firm’s scale of production.
The short-run marginal cost (SMC) curve is the change in the firm’s total cost as it produces one more unit of output in the short run, when some inputs are fixed and some inputs are variable. The SMC curve is always U-shaped, regardless of the firm’s scale of production.
The most efficient scale of production is the scale of production at which the firm can produce the maximum output at the lowest possible cost. This occurs at the minimum point on the LAC curve.