Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

تمرين 27

Give an intuitive explanation for the following questions about Figure :
1. Why does SAC exceed AC for every level of output except q*?
2. Why does SMC exceed MC for output levels greater than q*?
3. What would happen to this figure if the firm increased its short-run level of capital beyond K*?
Figure Short-Run and Long-Run Average and Marginal Cost Curves at Optimal Output Level
When long-run average cost is U-shaped and reaches a minimum at q*, SAC and SMC will also pass through this point. For increases in output above q*, short-run costs are higher than long-run costs.