which curve in cost theory is called envelope curve?
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Answer :
long run average cost curve (LRAC)
Explanation :
The curve long run average cost curve (LRAC) takes the scallop shape, which is why it is called an envelope curve
In the long-run, the firm can choose among different possible sizes of plant as determined by short run average cost curves such as SAC1, SAC 2 and SAC3. The LAC-curve is U-shaped and it is often called the 'envelope curve' because it 'envelopes' the SRC curve • LAC curve is also called 'envelope curve'.
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In the long-run, the firm can choose among different possible sizes of plant as determined by short run average cost curves such as SAC1, SAC 2 and SAC3. The LAC-curve is U-shaped and it is often called the 'envelope curve' because it 'envelopes' the SRC curve • LAC curve is also called 'envelope curve'.
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Answer:
In the traditional theory of a firm LAC curve is u shaped and it is often called the envelope curve because it envelopes the s r c curves .
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