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The long run average cost curve will help the company plan for product differentiation. With knowledge of a particular cost curve, the company can plan complement products to make up for deficits in profit margins.
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Why is the long run average cost curve known as the envelope curve or planning curve?
Long run average cost curve is known as envelope curve because it is formed by enveloping the short run average cost curves and it helps the entrepreneur in long term planning that is why it is also called planning curve.
What is planning curve?
Another term for the long-run average cost curve (LRAC). Using the name planning curve indicates that the long-run average cost curve is used to "making plans" especially concerning the desired scale of operations of a firm.
6 If the average total cost curve is falling what is necessarily true of the marginal cost curve If the average total cost curve is rising what is necessarily true of the marginal cost curve?
When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve.
What is the relationship between long-run average cost curve and short-run average cost curve?
what is the relationship between long run average cost curve and short run average cost curve?
How is a long-run average cost curve different from a short-run average cost curve?
The long-run average cost curve is longer.
Why is the long run average cost curve known as the envelope curve or planning curve?
Long run average cost curve is known as envelope curve because it is formed by enveloping the short run average cost curves and it helps the entrepreneur in long term planning that is why it is also called planning curve.
What is planning curve?
Another term for the long-run average cost curve (LRAC). Using the name planning curve indicates that the long-run average cost curve is used to "making plans" especially concerning the desired scale of operations of a firm.
6 If the average total cost curve is falling what is necessarily true of the marginal cost curve If the average total cost curve is rising what is necessarily true of the marginal cost curve?
When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve.
What is the relationship between long-run average cost curve and short-run average cost curve?
what is the relationship between long run average cost curve and short run average cost curve?
How is a long-run average cost curve different from a short-run average cost curve?
The long-run average cost curve is longer.
What is the relationship between marginal cost and average cost curves?
Margianal cost curve crosses the average total cost curve at the lowest point on the average total cost curve to be socially and ecomonical efficient.
Why is average cost and average variable cost are both you shaped?
the average variable cost curve and average cost curve are u- shaped because of the law of variable proportions.
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
A firm's marginal cost curve above the average variable cost curve is also?
A firm's short run supply curve
Why the marginal cost curve always cut the average cost curve at its lowest point?
This is because if a marginal figure is less than an average figure, the new average figure will decrease.
What is modern theory of cost?
Modern theory of cost is that the Economist belief that the average cost curve and marginal cost curve (AC & MC) are "L" shaped.
What is a firm's short run supply curve?
A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve.
