CAIE A-Level Economics 7.5.4 Long-run cost function

CAIE A-Level Economics 7.5.4 Long-run cost function
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise long-run cost analysis with LRAC, SRAC, LRTC and minimum efficient scale in firm and market-structure contexts.

How this is tested

  • use LRAC or LRTC diagrams to locate minimum average cost and MES
  • evaluate whether demand and MES data support a concentrated market structure
  • explain how changing fixed and variable factors can lower average cost at an output

Question 7

[Maximum number: 1]

The diagram shows the long-run total cost (LRTC) curve of a firm.

Figure for Question 7 — CAIE A-Level Economics

At which output is the long-run average total cost at its minimum?

A

OW

B

OX

C

OY

D

OZ