Author Question: Why is the long-run average total cost (LRATC) curve called the planning ... (Read 43 times)

big1devin

  • Hero Member
  • *****
  • Posts: 583
Why is the long-run average total cost (LRATC) curve called the planning curve?

Question 2

What are the earnings of a resource with a perfectly elastic supply curve called?
 a. Transfer earnings
  b. Dividends
  c. Economic rent
  d. Capital gain
  e. Interest



SomethingSomething

  • Sr. Member
  • ****
  • Posts: 323
Answer to Question 1

The LRATC curve is often called a planning curve, because it represents the cost data relevant to the firm when it is planning policy relating to scale of operations, output, and price over a long period of time. At a particular time, a firm already in operation has a certain plant and must base its current price and output decisions on the costs with the existing plant. However, when the firm considers the possibility of adjusting its scale of operations, long-run cost estimates are necessary.

Answer to Question 2

a



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Giardia is one of the most common intestinal parasites worldwide, and infects up to 20% of the world population, mostly in poorer countries with inadequate sanitation. Infections are most common in children, though chronic Giardia is more common in adults.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

Did you know?

The oldest recorded age was 122. Madame Jeanne Calment was born in France in 1875 and died in 1997. She was a vegetarian and loved olive oil, port wine, and chocolate.

Did you know?

Multiple sclerosis is a condition wherein the body's nervous system is weakened by an autoimmune reaction that attacks the myelin sheaths of neurons.

Did you know?

Cyanide works by making the human body unable to use oxygen.

For a complete list of videos, visit our video library