Historically,empirical Evidence Showed That It Was More Cost Effective to Have

question 83

Essay

Historically,empirical evidence showed that it was more cost effective to have a single generator of electricity serve a particular region's electricity needs than to have several smaller units compete against each other.More recently,technological advances have occurred in the generation of electricity that allow much smaller generating units to produce electricity for the same average cost as much larger units.Explain how this change would be reflected in the firm's long-run average cost curve and minimum efficient scale.