Q.Long-run average cost curve is also called as ______ curve.

The long-run average cost (LAC) curve is also known as the planning curve — option (b).

In the long run every input is variable, so the firm can build a plant of any size. For each level of output there is a short-run average cost (SAC) curve corresponding to a particular plant. The long-run average cost (LAC) curve is drawn as the envelope of all these SAC curves — it is tangent to each SAC and shows the lowest possible average cost of producing each output when the firm is free to select the best plant.

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The correct option is (d) planning: the LRAC curve is the planning curve.

The long-run average cost (LRAC) curve is the envelope of all the short-run average cost curves. Since in the long run every factor is variable, a firm can plan the size of plant that gives the lowest average cost for whatever output it wishes to produce. Because it guides the firm's choice of scale of production, the LRAC curve is known as the planning curve. …