MGEA02H3 Lecture Notes - Lecture 11: Opportunity Cost

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Published on 4 Nov 2015
School
UTSC
Department
Economics for Management Studies
Course
MGEA02H3
MGEA02 – Lecture 11 Costs of Production
Long Run
The long run average costs (LRAC) curve is the envelope of all the short run average cost
curves
Each short run average cost curve (SRAC) is associated with one level of capital
Long run is a period of time in which the amount of capital changes
IRTS = increasing returns to scale
DRTS = decreasing returns to scale
CRTS = Constant returns to scale
Qmes = output associated with minimum efficient scale
Economic Profit
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