Chapter 34.2 Flashcards
1
Q
Long Run Average Cost Curve
A
Curve that shows the least costly combination of any output.
2
Q
LRAC has usually a flatter U-shape when compared to
A
the SRAC curves as a result of economies/diseconomies of scale in the firm/industry
3
Q
Internal Economies of Scale
A
Benefits resulting from the firm’s internal decision to produce on a larger scale.
4
Q
External Economies of Scale
A
Benefits resulting from an increase in the scale of production of the industry in which the firm is operating.
5
Q
Economies of Scale
A
When costs per unit of output falls as scale of production increases.
6
Q
Diseconomies of Scale
A
When costs per unit increases as the scale of output increases.
