The long-run average total cost curve minimizes which cost?

The long-run average total cost curve represents the lowest cost per unit of output that a firm can achieve in the long run, where all inputs are variable and can be adjusted. The curve is derived from the combination of different short-run average total cost curves, each corresponding to different plant sizes or production technologies.

When looking for the production level that minimizes costs in the long run, the average total cost is the focus. This is because the firm aims to operate at the most efficient scale of production where it can take advantage of economies of scale and minimize the per-unit costs of producing its goods or services.

Selecting a production level on the long-run average total cost curve ensures that the total costs are spread out over a larger number of units produced, thereby minimizing the average total cost per unit. In this context, while average variable costs, fixed costs, and total costs are relevant concepts, they do not specifically capture the primary focus of this curve, which is the average total cost of production. The long-run average total cost curve itself is fundamentally linked to achieving the minimum average total cost for a given output level.