Скачать или смотреть Why long run average curve is Dish shaped | Economics for B.Com | VNSGU | Himanshu Nandwani

The long run average cost curve
(LARC) like the short run curve (SARC) is also U-shaped, but the difference, however, is that long run average is flatter than the short run average cost curve.

Reasons:
In the long period, there are only variable costs. There are very few costs which remain fixed in the long period. Thus, longer the period under consideration, fewer costs are fixed and more costs are variable. In the short run, if output of the firm is reduced, fixed costs cannot be reduced with the result that fixed costs will be spread over a smaller output raising the average fixed cost of the firm. In the long run, however, fixed costs can be reduced to some extent and therefore the average fixed cost will rise less sharply when output is increased in the long run as compared with short run. That is why U-shape of the long run average cost curve is less sharp or more pronounced or dish-shaped.

The long run average cost curve is less pronounced U-shaped or rather dish-shaped implies that in the long run when the firm adopts a larger scale of output its long run average cost in the beginning trends to decrease; at a certain point it remains constant and then it rises.

Long run average cost curve is flatter because in the long run such economies are possible as cannot be had in the short run; likewise, some of the diseconomies which are faced in the short run by the firm may not have to be faced in the long run.

A still another reason may be given in terms of greater divisibility of the factors of production in the long run. In the short run, some of the factors say like machines, management, etc. are indivisible and can not be used in different proportions to bring about changes in output. But in the long run, these indivisible factors can be used in different proportions to bring about changes in output.

#ushapedcurve #longrunaveragecostcurve #economics #vnsgu #bcomsem1 #commerceeducation #educationalcontent #himanshunandwani #LongRunAverageCostCurve #LRACCurve #EconomicsOfScale #DishShapedCurve #MicroeconomicsConcepts #CostCurve #RevenueCurve #LongRunAverageCostCurve #EconomicsGraphs