8. Long-run cost relationships The following graph shows the short-run average total cost curves and the long-run average total cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (ATC) and the long- run average total cost curve (LRATC): for example, Q1 marks the point of tangency between ATC1 and LRATC. The orange point on ATC3 indicates the firm's current output level in the short run (Q4).. COST PER UNIT In the long run, if the firm decides to keep output at its initial level, what will it likely do? Shut down Shift to operate on ATC2 Shift to operate on ATC4 Stay on ATC3 but decrease to the point touching LRATC Over which range of output levels do you find diseconomies of scale? Q2 to Q4 0 to Q1 0 to Q5 Greater than Q3 0 to Q3.

1. 8. Long-run cost relationships The following graph shows the short-run average total cost curves
and the long-run average total cost curve for a publishing firm. The five marked quantities
indicate points of tangency between each short-run average total cost curve (ATC) and the long-
run average total cost curve (LRATC): for example, Q1 marks the point of tangency between
ATC1 and LRATC. The orange point on ATC3 indicates the firm's current output level in the
short run (Q4)..
COST PER UNIT
In the long run, if the firm decides to keep output at its initial level, what will it likely do? Shut
down Shift to operate on ATC2 Shift to operate on ATC4 Stay on ATC3 but decrease to the
point touching LRATC Over which range of output levels do you find diseconomies of scale?
Q2 to Q4 0 to Q1 0 to Q5 Greater than Q3 0 to Q3