Final answer:
The statement that average cost equals marginal cost in the long run is not strictly true as these costs interact differently depending on the level of output. Marginal cost intersects with average cost at a certain point of production, but they are not constantly equal.
Step-by-step explanation:
In economics, it is not always true that in the long run, average cost equals marginal cost. Initially, the marginal cost of the first unit of output is equal to the total cost, as there are no previous units to compare the change in cost. However, as production continues, the relationship between average cost and marginal cost fluctuates due to fixed and variable costs. Marginal cost is defined as the change in total cost from producing an additional unit of output.
As the quantity of output increases, we observe that average costs and marginal costs interact in specific ways. Average total and variable costs are measures of the costs spread over all units produced, whereas marginal cost specifically relates to the cost of producing one additional unit. When the marginal cost curve intersects the average total cost curve, this is the point where the average cost of producing an item is equal to the marginal cost of producing it. Beyond this point, if the marginal cost is higher than the average cost, the average cost will start to increase, and vice versa.