1 / 6

Long Run Costs

Module. Micro: Econ:. 20. 56. Long Run Costs. KRUGMAN'S MICROECONOMICS for AP*. Margaret Ray and David Anderson. What you will learn in this Module :. Why a firm’s costs differ in the short run versus the long run. How a firm can enjoy economies of scale. Returns to Scale.

wylie-rice
Télécharger la présentation

Long Run Costs

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Module Micro: Econ: 20 56 Long Run Costs • KRUGMAN'S • MICROECONOMICS for AP* Margaret Ray and David Anderson

  2. What you will learnin thisModule: • Why a firm’s costs differ in the short run versus the long run. • How a firm can enjoy economies of scale.

  3. Returns to Scale The long-run average cost curve for a firm is “U- shaped” like the short-run average cost curves – but for a different reason.

  4. Short-run versus Long-run Costs • The short run: at least one input is fixed (can not be changed) • The long-run: all inputs are variable

  5. Economies and Diseconomies of Scale • Economies of Scale: the LRATC is falling as the firm expands. • Diseconomies of Scale: the LRATC is rising as the firm expands.

  6. Sunk Costs • A sunk cost is a cost that has been incurred in the past and cannot be recovered. • Sunk costs don’t matter in decision-making!

More Related