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    Long-Run Average-Cost Curve

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    As a kid, you recorded the costs of your Kool-Aid stand and drew your long-run average-cost curve. Now you work in a video chip factory. Would you expect any similarities IN SHAPE between the kool-aid cost curve and the long-run average cost curve for the chip factory? Would you expect any differences? Question requires specifics.

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    Solution Preview

    The shape of the long run average cost curve remains the same. The curve will be a U-shaped curve in both cases. This is because the long run average ...

    Solution Summary

    The solution explains the changes in LRAC.