If A Firm Enjoys Economies Of Scale

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If A Firm Enjoys Economies Of Scale

up to a certain output level, and cost then increases proportionately with output, what can you say about the shape of the long-run average cost curve?
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When the firm experiences economies of scale, its long-run average cost curve is downward sloping. When costs increase proportionately with output, the firm's long-run average cost curve is horizontal. So this firm's long-run average cost curve has a rounded L-shape; first it falls and then it becomes horizontal as output increases.

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