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Unformatted text preview: Q, because it is inefficient to produce small quantities. 1. AC=MC at the first unit of output. 3. AC usually has positive slope at large Q, because it is inefficient to exceed the firm’s current capacity. Five Properties of the AC curve (cont.) 5. If (2) and (3) hold, then AC reaches its minimum where AC=MC. 4. AC has: Negative slope where MC<AC; Positive slope where MC>AC. 2 What Shifts Cost Curves? If technology improves, then cost curves shift downward. If the firm invests in capacity, then its cost curves generally shift downward (at least at high outputs). If input prices fall, then cost curves shift downward....
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This note was uploaded on 04/02/2008 for the course ECON 200 taught by Professor Cramer during the Spring '07 term at University of Arizona- Tucson.
- Spring '07