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Unformatted text preview: its
Constant Returns to Scale: Output increases by
the same % that a firm increases its inputs by.
12 Average Total Costs Long-Run ATC Curve
ATC-1 Constant Returns to Scale
where LRATC Curve is flat
ATC-3 ATC-4 Long-Run
ATC Diseconomies of
LRATC Curve is
sloped upward Economies of Scale
where LRATC Curve
is sloped downward
Output The long-run ATC curve just “envelopes” the short run ATCs
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- Spring '14