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Economies of scale
answer
As output increases long-run average cost will fall because of internal economies of scale
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Diseconomies of scale
answer
Further output increases, the long-run cost will increase because of internal diseconomies
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Constant returns to scale (Production)
answer
Percentage change of all resources is equal to percentage change in output
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constant returns to scale (Cost)
answer
As I increase output my long-run average total cost remains the same
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Decreasing returns to scale
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Percentage change in all resources is greater then parentage change in output
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Increasing returns to scale
answer
Parentage change in all resources is less then percentage change in output
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Minimum efficient scale (MES)
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-Lowest level of output at which long run avrage costs are minimized
-Can determine the structure of the industry
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Natural monopoly
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Long run costs are minimized when one firm produces the product
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