Long Run Average Cost Curve

Question 1

What does long run average cost curve measure?

Answer 1

The cost per unit produced when there are no fixed factors

Capital to labour ratios won’t reduce

Question 2

What is the long run average cost curve comprised of?

Answer 2

Multiple short run average cost curves

Question 3

Are there diminishing returns and specialisation in the long run?

Answer 3

There are no diminishing returns but there is still specialisation so the curve slopes down