Long Run Production

Economies of Scale » expands a firms scale of operations so ATC decreases

1. Labor Specialization » dividing jobs as workers increase

2. Managerial Specialists » individuals focusing on specific areas of management

3. Efficient (human/physical)capital use » less production = less equipment and vice-versa

4. Start-up costs decline overtime

5. Ad costs decline as selling increases

Diseconomies of scale » decrease scale of operation so increase of ATC

• Hard to maintain efficient firm operations as firm grows