Question:
How can we use LRAC and LRMC to judge the economies of scale for a firm?
Author: Hjalmer PedersenAnswer:
LRMC < LRAC: LRAC decreasing, hence economies of scale LRMC > LRAC: LRAC increasing, hence dis-economies of scale LRMC = LRAC: LRAC at its minimum, constant returns to scale
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