Practice Long run

The diagram below shows the LRAC for a firm. The SRATC curves 1-5 refer to different plant sizes.


In the long run, the lowest cost level of output achievable by this firm is at point

Illustration for practice question: Practice Long run

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More Long Run Costs Questions:

A) A firm experiences economies of scale if its average total cost ________

(increases/decreases/remains constant as its output increases)

B) A firm experiences diseconomies of scale if its average total cost ________

Economies of scale occurs when