MGEA02H3 Study Guide - Final Guide: Monopoly Price, Average Variable Cost, Natural Monopoly
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MGEA02H3 Full Course Notes
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Mgea02 cost of production (iii) & competitive markets (ii) Cost of production (iii) long run costs. The firms can enter and exit freely, under the perfectly competitive market. The lrac curve, is a combination of all minimum. Firms will operate in min lrac point, or where. Long run cost curve is the min lrac point, and it is the lr. Return to scale: return to scale: rate at which when inputs increases, how much does output increases proportionally. Increasing return to scale: situation when output is more than double when inputs are doubled. Constant returns to scale: situation when output is double when inputs are doubled. Decreasing return to scale: situation when output is less then double, when inputs are doubled. Economies of scale: the cost advantages that the firm gains because the increase in size, with cost per unit of output generally decreasing with the increasing scale.