Assuming decreasing returns to scale, illustrate the long run average cost curve under the following factor price conditions. Carefully explain your answer. For the cost curves which have the same slope (either negative or positive) explain why the slopes are different. Neither pecuniary economies or diseconomies, that is, all firms pay the same for inputs AC Qty Pecuniary economies, that is, larger firms pay less for their inputs. AC Qty Pecuniary diseconomies, that is, larger firms pay more for their inputs. AC

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A:

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