Cost curves - short run vs long run
SR vs LR total and average costs:
SR vs LR total and average costs:
Here is an example, corresponding to a decreasing-returns-to-scale (DRS) Cobb-Douglas:
Another example - a perfect substitutes case:
Here is an example, corresponding to a decreasing-returns-to-scale (DRS) Cobb-Douglas:
Another example - a perfect substitutes case: