Deriving the long run average cost curve


Question 1:

a) Trace out the process of deriving the long run average cost curve.

b) Where would a rational producer choose his point of operation with respect to LAC?

Question 2: Describe the shape of LAC by using the different concepts of RTS.

Question 3: Describe the fundamental idea behind the economies of scope.

Question 4: The learning curve imitates the efficiency gains resultant from the cumulative total of all output produced till date. Explain.

Question 5:

a) Deduce the concept of economies of scale and scope.

b) Analyze this concept:

• In purchasing
• In advertising
• In R & D

Question 6:

a) Define the term cost reduction strategies.

b) Analyze the fundamental concept of cost reduction strategies.

c) Describe the factors which influence cost reduction?

Question 7:

a) Differentiate between the cost reduction and cost control strategies.

b) What are the merits and demerits of the cost reduction?

Question 8: Describe in detail the concept of the operating leverage.

Question 9:

a) Define the term idea of BE.

b) Analyze the basic concept by taking the linear TR and TC schedules. 

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Microeconomics: Deriving the long run average cost curve
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