Why are some long-run average cost curves steeper on the downward side than others?
What will be an ideal response?
The slope of the downward-sloping portion of the long-run average cost is a measure of the degree to which the firm experiences economies of scale. If the firm expends a large amount of its costs on indivisible inputs, the firm will spread this indivisible input's cost out over more and more units as output increases, implying significant economies of scale. Firms that require many individual tasks that can be learned easily will also have substantial increasing returns due to specialization.
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Hot dog vendors on the beach fail to cooperate with one another on the quantity of hot dogs they should sell to earn monopoly profits. A consequence of their failure is that, relative to the outcome the vendors would like, (i) the quantity of hot dogs supplied is closer to the socially optimal level. (ii) the price of hot dogs is closer to marginal cost. (iii) the hot dog market at the beach is
less competitive. a. (i) and (ii) b. (ii) and (iii) c. (i) and (iii) d. (iii) only
Which of the following is considered a command economy?
a. communism b. socialism c. fascism d. All of these.