Are the Short-Run and Long-Run Average Cost Curves U-Shaped for the Same

question 42

Essay

Are the short-run and long-run average cost curves U-shaped for the same reason? Explain.

---

Definitions:

Buyer Responsiveness

THe degree to which consumers change their demand for a product or service in response to changes in its price or attributes.

Fixed Costs

Business expenses that remain constant regardless of the level of production or business activity, such as rent, salaries, and loan payments.

Cross Elasticity

A measure of how the demand for one good responds to a change in the price of another good.

Normal Good

A good for which demand increases as the income of consumers increases, and falls when consumer income decreases.