Which of the Following Statements Best Explains Why Long-Run Average

Multiple Choice

Which of the following statements best explains why long-run average cost is never greater than short-run average cost?

A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run.
B) In the long run, diseconomies of scale might not occur, but in the short run diminishing marginal returns do.
C) In the long run, the cost of capital declines because the firm is able to pay down some of its debts.
D) In the long run, the average cost curve need not be U-shaped, but in the short run it is.