Short And Long Run Costs Flashcards
1
Q
What is the minimum efficient scale?
A
The point where long run average costs are neither decreasing nor rising
2
Q
Why does the long run average total cost curve fall initially before rising again?
A
It benefits from economies of scale however eventually it starts to suffer diseconomies of scale
3
Q
How do economists view the long-run?
A
An envelope (combination) of all the short-run possibilities
