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From course:

Industrial Organisation 2022

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Question:

How can we use LRAC and LRMC to judge the economies of scale for a firm?

Author: Hjalmer Pedersen



Answer:

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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