The L-shaped long-run average cost curve
Some firms find that average costs fall as they grow, then stay flat — never rising again. Economists draw this as an L-shaped long-run average cost curve.
Real World
Google's cloud infrastructure shows an L-shaped LRAC: after massive early investment, unit costs of storing data fell sharply and have remained flat for years as scale increased further — there is no evidence of rising average costs.
Exam Focus
If asked to 'assess' the shape of the LRAC curve, include both the traditional U-shape argument and the L-shape counter-evidence for balanced evaluation marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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