1. The presence of explains the negatively sloped portion of a long-run average-cost curve, and the notion of explains the horizontal portion of the curve. 2. Consider the information provided in...

1. The presence of


explains the negatively sloped portion of a long-run average-cost curve, and the notion of


explains the horizontal portion of the curve.

2. Consider the information provided in Figure 23.6 on page 530. Suppose the output of a large aluminum firm drops from 2 million pounds to 1 million pounds per year. The long-run average cost of producing aluminum will go from

$ to $


.

3.The typical short-run average-cost curve is shaped like the letter U, while the typical long-run average-cost curve is shaped like the letter L because are not applicable in the run

.

4. The cost of producing the first fake killer whale is about three times the cost of producing the second because the firm uses inputs. (Related to Application 3 on page 531.)