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LONG-RUN AVERAGE COST: The per unit cost of producing a good or service in the long run when all inputs are variable. In other words, long-run total cost divided by the quantity of output produced. Long-run average cost is based on economies of scale (or increasing returns to scale) and diseconomies of scale (or decreasing returns to scale).
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INCREASING RETURNS TO SCALE A given proportional change in all resources in the long run results in a proportional greater change in production. Increasing returns to scale exists if a firm increases ALL resources--labor, capital, and other inputs--by a given proportion (say 10 percent) and output increases by more than this proportion (that is more than 10 percent). This is one of three returns to scale. The other two are decreasing returns to scale and constant returns to scale.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time lost in your local discount super center looking to buy either a black duffle bag with velcro closures or any book written by Isaac Asimov. Be on the lookout for infected paper cuts.
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A half gallon milk jug holds about $50 in pennies.
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"Success is the child of audacity. " -- Benjamin Disraeli, British statesman
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BIS
Bank for International Settlements
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