Principles of Microeconomics / Unit 17 MIC 1620 short lesson, about 20 seconds
The Long Run: Scale
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The idea
In the long run every input varies. Economies of scale lower average cost as output grows; constant returns hold it flat; diseconomies raise it. Minimum efficient scale against market size decides how many firms fit.
In practice
A market ten times minimum efficient scale holds about ten firms.
Where people slip
Constant-cost industry is about input prices; constant returns are about one firm's scale.
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