Question

Why does the long-run total cost (LTC) curve start from the origin?

Options

• Because variable cost is always zero

• Because fixed cost is always positive

• Because total cost is always constant

• Because when output is zero, all costs can be avoided

Answer 1

Because when output is zero, all costs can be avoided

Explanation:

In the long run there is no fixed cost, so if the firm produces zero output, it can avoid all costs and the LTC curve starts from the origin.