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LRAC CURVE: The common abbreviation for the long-run average cost curve, which is a curve depicting the per unit cost of producing a good or service in the long run when all inputs are variable. The long-run average cost curve can be derived in two ways. On is to plot long-run average cost, which is, long-run total cost divided by the quantity of output produced. at different output levels. The more common method, however, is as an envelope of an infinite number of short-run average total cost curves. Such an envelope is base on identifying the point on each short-run average total cost curve that provides the lowest possible average cost for each quantity of output. The long-run average cost curve is U-shaped, reflecting economies of scale (or increasing returns to scale) when negatively-sloped and diseconomies of scale (or decreasing returns to scale) when positively sloped. The minimum point (or range) on the LRAC curve is the minimum efficient scale.
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OPPORTUNITY COST, PRODUCTION POSSIBILITIES The production possibilities analysis, which is the alternative combinations of two goods that an economy can produce with given resources and technology, can be used to illustrate opportunity cost--the highest valued alternative foregone in the pursuit of an activity.
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WHITE GULLIBON
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Today, you are likely to spend a great deal of time lost in your local discount super center seeking to buy either a hepa filter for your furnace or a wall poster commemorating next Thursday. Be on the lookout for empty parking spaces that appear to be near the entrance to a store.
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A thousand years before metal coins were developed, clay tablet "checks" were used as money by the Babylonians.
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"The two most powerful warriors are patience and time. " -- Leo Tolstoy, author
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Dow Jones
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