Question: Draw a long-run average total cost curve. a. Why does it slope downward initially? b. Why does it eventually slope upward? c. How would your

Draw a long-run average total cost curve. 

a. Why does it slope downward initially?

b. Why does it eventually slope upward?

c. How would your answers to a and b differ if you had drawn a short-run cost curve?

d. How large is the fixed-cost component of the long-run cost curve?

e. If there were constant returns to scale everywhere, what would the long-run cost curve look like?

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