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Explain how speculation tends to smooth prices over time and increase welfare. Use the model of demand and supply to illustrate your explanation.
Short-Run Production
The period in which at least one input or factor of production is fixed, allowing firms to adjust only certain inputs to change output levels.
Average Total Cost
The total cost of production (fixed and variable costs) divided by the total quantity of output produced.
Marginal Cost
The additional cost incurred in the production of one extra unit of a good or service.
Average Fixed Cost
The fixed costs of production divided by the quantity of output produced; these costs decline as production increases.
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