[amp_mcq option1=”LAC” option2=”LMC” option3=”AFC” option4=”SAC” correct=”option1″]<\/p>\n
The correct answer is: A. LAC<\/p>\n
The long-run average cost (LAC) curve is the envelope of the short-run average cost (SAC) curves. It shows the lowest average cost of production that can be achieved in the long run, regardless of the level of output.<\/p>\n
Normal profits are the minimum profit that a firm must earn in order to stay in business. They are included in the LAC curve because they are a cost of production.<\/p>\n
The other options are incorrect because they do not include normal profits.<\/p>\n
AFC: The average fixed cost (AFC) curve is a downward-sloping curve that shows the average cost of producing each unit of output when the fixed costs are constant. Normal profits are not included in the AFC curve because they are not a cost of production.<\/p>\n
LMC: The long-run marginal cost (LMC) curve is the curve that shows the change in the total cost of production that results from producing one more unit of output. Normal profits are not included in the LMC curve because they are not a cost of production.<\/p>\n
SAC: The short-run average cost (SAC) curve is the curve that shows the average cost of producing each unit of output when both the fixed costs and the variable costs are considered. Normal profits are not included in the SAC curve because they are not a cost of production.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”LAC” option2=”LMC” option3=”AFC” option4=”SAC” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-58444","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n