Question:
How is the Shape of the LRAC determined?
Author: eric_galvaoAnswer:
-Average Costs will Fall, when Output rises. This occurs when a Firm has Internal Economics of Scale. -Average Costs Rise, when output rises as well. This occurs when Firms has Internal Diseconomies of Scale. -Firms can experience both Internal Economies/Diseconomies at same Output - whichever one has the Greatest effect matters here.
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