When price line is below minimum LRAC, firm produces _____________.

output level where LRAC intersects LRMC

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zero output

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output level where price line intersects LRMC

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none of the above

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Solution

The correct option is C zero output
If a profit-maximising firm produces a positive output in the long run, the market price must be greater than or equal to the LRAC at that output level. Therefore when price is less than minimum LRAC, firm produces zero level of output.

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When price line is below minimum LRAC, firm produces _____________.

The correct option is C zero outputIf a profit-maximising firm produces a positive output in the long run, the market price must be greater than or equal to the LRAC at that output level. Therefore when price is less than minimum LRAC, firm produces zero level of output.

The correct option is C zero output
If a profit-maximising firm produces a positive output in the long run, the market price must be greater than or equal to the LRAC at that output level. Therefore when price is less than minimum LRAC, firm produces zero level of output.