Respuesta :
Gains from the specialization of inputs explain why long-run average total cost at first decreases as output increases.
By dividing the overall cost of manufacturing by the total output, the average total cost is determined. In other words, the average cost equals the total fixed and variable costs of the company divided by the total number of units produced.
The typical overall cost is represented by the following equation: Average total cost is equal to the product of total fixed costs and total variable costs.
The average total cost starts out very high since the fixed cost dominates total costs at low output levels and a denominator is a small number. As a result of the fixed expenses being spread out over a larger volume of output, the average total cost decreases.
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