If a firm is producing where its short-run marginal cost (SMC) is equal to price and the long-run marginal cost (LMC) is less than long-run average cost (LAC), then it would do better in the long-run by
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1 mark, −0.33MicroeconomicsCosts of productionLong-run cost, economies and diseconomies of scaleHardabout 2 min
UoH 2011 Question 25: Costs of production
Answer and worked solution
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Costs of production has come up 83 times in 7 exams since 2006.
What this question tests
This question is on Long-run cost, economies and diseconomies of scale, part of Costs of production in Microeconomics.
The long-run average cost curve as an envelope, its U-shape and the minimum efficient scale.
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Question from the UoH 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.