(Graph: figure 2.1 p.75)Īverage costs curves are L-shaped: average costs decrease up to the minimum efficient scale (MES) of production and it results that every firms have the same average costs if they produce beyond or at MES (Graph: figure 2.2 p.76).Įconomies of scope: due to an increase of variety of goods and services produced, the firm can achieve saving. The optimal horizontal boundaries of a firm depend on economies of scale and scope.Įconomies of scale: due to an increase in the production of a given good or service, a firm can decrease its unit-cost.Īverage costs curves are U-shaped: costs of small and large firms > costs of medium-size firms. Horizontal boundaries: the varieties and quantities of products and services that a firm offers.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |