MATH 2B Study Guide - Average Cost, Marginal Cost, Marginal Revenue
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MATH 2B Full Course Notes
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If you increase the quantity of your production, average total cost will decrease: who experiences this? i. Small factories who in the long run expand its factory and hire workers; they will enjoy the glory of specialization. If you increase the scale of your quantity, average total cost will increase: who experiences this? i. Large factories who in the long run seek to expand, but this only leads to a factory too large that experiences coordination problems that make it difficult to keep profit up and cost down. Constant returns of scale: when atc stays the same even after you change the quantity. Low levels of production = average total cost is falling because specialization begins (atc is u-shaped) High levels of production = average total cost is increasing because specialization is being abused/ exploited already. Short run supply curve = the marginal cost curve part above avc and atc.
