craftsman and to follow my instructions, absurd though they
might be.”
Viner’s mistake was to require that the draftsman connect all
the minimum points of the SRATC curves rather than to
construct the curve that would be the lower envelope of all the
SRATC curves. The former curve can, of course, be drawn, but
it is not the LRAC curve. The latter curve is the LRAC curve and
is tangent to each SRATC curve.
Since Viner’s article was published in 1931, generations of
economics students have experienced great satisfaction when
they finally figured out his crucial mistake. Viner’s famous
article was often reprinted, for its fame was justly deserved,
despite the importance of the mistake. But Viner always
rejected suggestions that he correct the error because he did
not want to deprive other students of the pleasure of feeling
one up on him.
The economic sense of the fact that tangency is not at the
minimum points of SRATC rests on the subtle distinction
between the least-cost method of utilizing a given plant and the
least-cost method of producing a given level of output. The first
concept defines the minimum of any given SRATC curve,
whereas the second defines a point on the LRAC curve for any
given level of output. It is the second concept that interests us
in the long run. If bigger plants can achieve lower average
costs, there will be a gain in building a bigger plant and