Answer to Question #146294 in Microeconomics for Rakshanan

Question

. Discuss with appropriate illustration, the long run behaviour of the average cost curve with important economic implications to the firm.

Answer 1

Long run average fee indicates the raletionship between output and average cost for each level of output. Expanding the scale of production in long run reduces average fees over a vary of output. Lower common charges leads to enhancement of productive effectivity and gives an enterprise aggressive advantage in a market ensuing to lower prices and higher profit.