Long run average total cost curve relating to economies and diseconomies of scale
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- Опубликовано: 27 авг 2024
- This video goes over the construction of the long run average total cost curve by showing how it relates to the many possible short run average total cost curves. It then discusses how economies of scale, constant returns to scale, and diseconomies of scale can be seen on the long run average cost curve.
Essentially we are taking multiple short run average total cost curves with varying levels of capital and figuring out why they have a U shape in the long run. This is also explored by discussing what returns we get from "doubling" the inputs. If it is less than double then we are experiencing diseconomies of scale and if it more than doubles than we are experiencing economies of scale. Finally, if it exactly doubles then we are experiencing constant returns to scale.
More information on this topic can be found at www.freeeconhel...
You really explained this in the most simple way.
Thank you so much
You literally saved me
I have my micro exam in 2 days.
Thanks again
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Thanks, you explained it the most simple and quickest!
Big thumbs up man. Everything that was needed is in this video.
Clear and simple explanation. Thanks!
Very easy to understand with your graph and explanation.
thanks bro you explaine it so simply than my book .
Thanks, informative and thanks for drawing the examples. They really help to visualize
Rebecca Harris hi
Very very helpful thank you! Simple and straight to the point.
awesome explanation. short, simple, and informative!
You should probably explain that short run average costs only intersect with long run during times when capital is frozen and changes in labor are made only.
By definition, a SRATC is when capitol is frozen and labor is not.
And LRATC is when neither capital or labor is frozen.
So, by freezing capitol at any given point, we could have a specific SRATC and that cost curve would intersect with the LRATC (assuming that the capital would be unfrozen later on).
short and superb
clear and nice explanation
So easy - Thanks you helped so much :)
This is really good.:) feeling a bit more confident about this section... beeeeeg thanx
Thanks, very helpful!
thanks very much.
Hi! Does this mean that the long-run average cost curve will always be equal to or lower than your short-run average cost curve for any given combination of labor and capital? And to ease diseconomies of scale i will just have to decrease production? :)
please give a substitle. so everyone easy to understand your explanation
Thank you, sir!
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Thanks
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thank youuu. This is v helpful
You just saved me
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Are economy of scale and returns to scale the same thing
really helpful, thanks!
Thank you!
Thanks so much for this lol, just saved my grade 😂
Awesome! Glad to help.
OOOOOOHHHH I get it now.
Gud explain sir.......👍tq
Thank you for the kind words!
thank you
so is this why LRATC is u shaped
thank u~~!
Thank u sir
omg!!! thank you!!!!!
Hey it will be mc curve not tc
Not true. You are mixing the concepts of economies of scale and Returns to Scale. The equivalence between both only applies when inputs are used in a constant proportion.
You've used the definition of increasing returns to scale to refer to Economics of scale (idem for Diseconomies of Scale) BUT this need not be true. When LRATC reaches its minimum there are neither economies of scale nor diseconomies of scale BUT you can't say there are constant returns to scale because that might not be the case.
Just consider a firm with constant returns to scale (a doubling of inputs leads to a doubling of output) which experiences an improvement in its technology process. In the meantime (while switching its technology towards the use of more sophisticated machines for instance) the firm might be able to reduce its average costs and thus experience both Constant returns to Scale and Economies of Scale (output can be doubled for less than a doubling of costs). They are not mutually exclusive because input proportions can be INDEED variable.
thank u
tysm ✌😘
🤗👍
perfecttt ;)
true, true, but once I take the exam is presented in a totally diff. way and i fail it.
An add came before your video that was profanity ridden. Just to let you know.
Really disgusting!
Thanks
thank you