True or false: A firm have to always produce at an output at which long-run average cost is minimized. Describe.
It is false. In the long run, under perfect competition, firms have to produce where average costs are minimized. The long-run average cost curve is composed by finding the minimum cost at every level of output. However, in the short run the firm might not be producing the optimal long-run output. Therefore, if there are any fixed factors of production, the firm does not always generate where long-run average cost is minimized.