Social Sciences and History / Unit 13 SSH 1231 short lesson, about 20 seconds
Economies, Constant Returns, Diseconomies of Scale
Captions available
The idea
In the long run firms choose a production technology. The long-run average cost curve shows the lowest average cost at each output. Downward-sloping means economies of scale; flat, constant returns to scale; upward-sloping, diseconomies of scale.
In practice
Demand against the LRAC's bottom sets the number of firms.
Where people slip
A flat bottom allows many firm sizes.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Unlocks
- Nothing yet depends on this.
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