Question

Explain how “learning by doing” and transportation costs each affect the long-run average cost curve.

Answer 1

Solution

Learning through the result of increased production of inputs. In this way, for every scale of operation, the production capacity of each unit of output decreases because the number of input needed to produce the output is reduced.In this way, the short-run and therefore, the long-run average spending reductions are reduced. LRAC curves vary, with transportation costs involved in long-run average cost work, all of which In addition, if there is an increase in the average transportation cost with production capacity, then the goods should be sent to a greater extent, which will minimize the long-term average cost.