Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 7: Q 26. (page 184)

What is a long-run average cost curve?

Short Answer

Expert verified

The sum of many short run average cost curves is the long run average cost curve.

Step by step solution

01

Step 1. Introduction

The long run is defined as a time span during which all production parameters, referred to as inputs, are variable and businesses have enough leverage to enter and depart any market or industry.

02

Step 2. Explanation

The long run is defined as a time span during which all production parameters, referred to as inputs, are variable and businesses have enough leverage to enter and depart any market or industry.

The long run average cost curve of a firm illustrates the minimum average total cost at which a firm may achieve a certain amount of production in the long run when all inputs are variable.

With the help of the diagram below, this is explained:

The sum of many short run average cost curves is the long run average cost curve.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What is the relationship between marginal product and marginal cost? Why do you suppose that is? Is this relationship the same in the

long run as in the short run?

What are explicit and implicit costs?

It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss.

Return to Figure 7.7. What is the marginal gain in output from increasing the number of barbers from 4 to 5 and from 5 to 6? Does it continue the pattern of diminishing marginal returns?

What is a production technology?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free