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    Economies and Diseconomies of Scale

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    1. Explain the difference between short run and long run as they are used in economics.

    2. Differentiate between Economics of scale and Diseconomies of scale.

    3. Describe and explain a perfectly competitive firm's short run supply curve.

    4. Describe characteristics of a perfectly competitive market.

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    Solution Preview

    In the long run, all inputs into the production process can be varied. In the short run, one one input (usually labor) can be varied. This has implications as far as how profitable the firm can be in changing circumstances, and whether it should close when it's losing money on each additional item sold.

    Economies of scale occurs when a firm is able to reduce its per unit cost of production with each ...

    Solution Summary

    Economies and diseconomies of scale and relationship to short and long run.