Microeconomics 29 Friday, November 10, 2006

Microeconomics 29 Friday, November 10, 2006 - • In the...

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Friday, November 10, 2006 Microeconomics LR cost are all variable 3 POSSIBILITIES Small factory Medium sized factory Larger factory $ ATC1 ATC2 ATC3 A B Q RED Line represents Long Run average total cost curve Diminishing returns set in relatively quickly with a small factory Diminishing returns set in much later for median sized factory Diminishing returns set in very late fro large factories
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Unformatted text preview: • In the long run we would choose the plant that yielded the lowest average total cost for any desired level of output the red portion of the curves (LATC) represents these choices the smallest factory (ATC1) is best for output below “A”; the largest factory (ATC3) is best for output greater than “B”....
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This note was uploaded on 03/20/2008 for the course EC 201 taught by Professor Xasdf during the Fall '08 term at N.C. State.

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