lrcosts

lrcosts - LONG-RUN COSTS In the long-run there are no fixed...

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slide 1 Long-run costs LONG-RUN COSTS LONG-RUN COSTS In the long-run there are no fixed inputs, and therefore no fixed costs. All costs are variable. Another way to look at the long-run is that in the long-run a firm can choose any amount of fixed costs it wants for making short-run decisions.
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slide 2 Long-run costs The Long-run Average Cost Curve The long-run average cost curve shows the minimum average cost at each output level when all inputs are variable, that is, when the firm can have any plant size it wants. There is a relationship between the LRAC curve and the firm's set of short-run average cost curves.
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slide 3 Long-run costs SR and LR Average Costs Economists use the term “plant size” to talk about having a particular amount of fixed inputs. Choosing a different amount of plant and equipment (plant size) amounts to choosing an amount of fixed costs. Economists want you to think of fixed costs as being associated with plant and equipment.
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This note was uploaded on 01/05/2012 for the course ECON 201 taught by Professor Brown during the Winter '12 term at BYU.

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lrcosts - LONG-RUN COSTS In the long-run there are no fixed...

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