Answer to Question #242678 in Microeconomics for Dee

Question

What level of output yields minimum cost per unit of y

Answer 1

Solution:

The level of output that yields a minimum cost per unit of y is the quantity of output at which the average total cost is lowest, that is the bottom of the U-shaped average total cost curve.

At this point, the economies of scale are depleted and the production at this level produces the lowest per-unit cost. Therefore, the firm is producing an output level at the lowest possible cost.