increases, average costs are.
d. The LRAC curve represents the for each level of
output.
e. Each short-run average total cost curve is at some
point to the LRAC curve. The LRAC curve shows the
lowest possible cost of producing any output when all
factors are. The SRATC curve shows the lowest
possible cost of producing any output when one or more
factors are.
3. Fill in the blanks to make the following statements correct.
a. In the long run, a firm is moving along its existing LRAC
curve. In the very long run, however, the LRAC curve is
shifting as technology improves.
b. To measure the extent of technological change,
economists usually try to measure , which is defined as
a measure of output produced per unit of used.
c. Over the very long run, the most important source of
sustained growth in material living standards is
productivity driven by change.
d. The profit-maximizing behaviour of firms leads them to
invent and innovate new products and processes that will
increase their profits. As a result, we refer to
technological change as to the economic system.
