« previous next »

Author Question: How do increasing returns to scale affect the shape of the long-run average cost curve? What will ... (Read 50 times)

fbq8i

  • Hero Member
  • *****
  • Posts: 527
on: Jun 29, 2018
How do increasing returns to scale affect the shape of the long-run average cost curve?
 
  What will be an ideal response?

Question 2

If marginal costs are constant what will the average variable cost curve look like? What about the average total cost curve?
 
  What will be an ideal response?


zacnyjessica

  • Sr. Member
  • ****
  • Posts: 345
Reply #1 on: Jun 29, 2018
Answer to Question 1

When the firm faces increasing returns to scale, average costs per unit produced fall as the firm's scale of production rises. Thus, the long-run average cost curve would be downward sloping.

Answer to Question 2

The average variable cost curve will coincide with the average variable cost. The average total cost curve will slope downward but will not be U-shaped.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

Drugs are in development that may cure asthma and hay fever once and for all. They target leukotrienes, which are known to cause tightening of the air passages in the lungs and increase mucus productions in nasal passages.

Did you know?

The highest suicide rate in the United States is among people ages 65 years and older. Almost 15% of people in this age group commit suicide every year.

Did you know?

The Babylonians wrote numbers in a system that used 60 as the base value rather than the number 10. They did not have a symbol for "zero."

Did you know?

The National Institutes of Health have supported research into acupuncture. This has shown that acupuncture significantly reduced pain associated with osteoarthritis of the knee, when used as a complement to conventional therapies.

pH scale pH scale
The Role of Summation in Long-Term Potentiation The Role of Summation in Long-Term Potentiation
Apply the cold source, and ask for immediate feedback. Conform the cold source to the shape of the ... Apply the cold source, and ask for immediate feedback. Conform the cold source to the shape of the ...
Ayurvedic massage. Long sweeping stroke from foot around shoulder and down the arm, recipient prone. Ayurvedic massage. Long sweeping stroke from foot around shoulder and down the arm, recipient prone.
Classic Supply - Demand Curve Classic Supply - Demand Curve
Glasgow Coma Scale (1 of 2) Glasgow Coma Scale (1 of 2)
Video: X chromosome inactivation in calico cats

For a complete list of videos, visit our video library