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MGEA02H3 (200)
Lecture 11

MGEA02H3 Lecture Notes - Lecture 11: Opportunity CostPremium

Economics for Management Studies
Course Code
Gordon Cleveland

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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
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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