This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: person. Such changes make productive activities more efficient and hence are called economies (advantages) of the scale . Since the long run goes on combining such individual advantages it is also called a chain of the short runs . In Figure 30 we find Long run Average cost Curve (LAC) represented by a chain of three short run cost curves SAC1, SAC2 and SAC3. In between them there may be many more SACs. We have also drawn LMC which is the Long run Marginal cost Curve. It intersects LAC at the minimum point of LAC which is N2 at output level Q2....
View Full Document
- Fall '10
- Economics, Economics of production, Cost curve