Question

Why is the long-run average cost curve also called the planning curve?

Why is the long-run average cost curve also called the planning curve?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:-

The long-run average cost curve is often called the ‘planning curve’ of the firm by some econo­mists because a firm plans to produce any output in the long run by choosing a plant on the long- run average cost curve corresponding to the given output. The long-run average cost curve reveals to the firm that how large should be the plant for producing a certain output at the least possible cost.

Thus while making decisions regarding the choice of a plant, the firm has to look at its long-run average cost curve enveloping a family of plant or short-run average cost curves.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1) the long run cost curve is called the planning envelope because a. is is a...
1) the long run cost curve is called the planning envelope because a. is is a succession of short run costs curves b. the choice of imput combinations are flexible c. because it will determine the optimal plant size d. all of the above 2) an industry with many different plant sizes is one with a. a long economies of scale b. quick diseconomies of scale c. constant economies of scale d. it can be a combination of different types...
why diseconomies of scale occur on the long-run average total cost curve falls?
why diseconomies of scale occur on the long-run average total cost curve falls?
The graph illustrates an average total cost (ATC) curve (also sometimes called average cost), marginal cost...
The graph illustrates an average total cost (ATC) curve (also sometimes called average cost), marginal cost (MC) curve, average variable cost (AVC) curve, and marginal revenue (MR) curve (which is also the market price) for a perfectly competitive firm that produces toy spaceships. Please answer the three questions, assuming that the firm is profit maximizing and does not shutdown in the short run. What is the firm's total revenue? $ What is the firm's total cost? $ What is the...
Which of the following is true in constructing the long-run average cost curve? a. Short-run average...
Which of the following is true in constructing the long-run average cost curve? a. Short-run average total cost curves are used. b. Marginal costs curves are summed at each output level. c. Short-run average variable cost curves are summed at each output level. d. Short-run average fixed cost curves are summed at each output level. There are _____ different areas identified by the textbook in moving along a long-run average cost curve. a. two b. three c. five d. four...
"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at...
"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve." True or false? Explain your answer. Why is the total profit curve shaped like a hill? Is it a good thing to go to a point where marginal profit is zero? Explain. What is the value of marginal profit at the profit-maximizing output?
"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at...
"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve." True or false? Explain your answer. Why is the total profit curve shaped like a hill? Is it a good thing to go to a point where marginal profit is zero? Explain. What is the value of marginal profit at the profit-maximizing output?
Short run cost curves: a. Explain why the marginal cost curve intersects the average total and...
Short run cost curves: a. Explain why the marginal cost curve intersects the average total and variable cost curve at their respective minimum values: b. At what point on the ATC will a perfectly competitive firm always produce in the long run: c. The supply curve for a perfectly competitive firm is the same as one of the cost curves based on a specific criterion. State both the curve and the criterion:
Using the concept of minimum efficient scale (MES) at long run average cost curve explain why...
Using the concept of minimum efficient scale (MES) at long run average cost curve explain why firms in some industries can have market power to set price strategically than firms in other industries.
Regardless of the level of output, the long run average total cost curve is the least...
Regardless of the level of output, the long run average total cost curve is the least expensive cost curve.  True  False
In the health care setting, the position of the long-run average cost curve is determined by...
In the health care setting, the position of the long-run average cost curve is determined by a set of circumstances that includes the price of all inputs, quality, and patient case mix. Provide an example from the health care setting of a change that will cause the long-run average cost curve to shift down. Justify the validity of the example.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT