Economies of scale

Workbook Act 3-4

What's the difference between LRATC and SRATC? Fixed versus variable

How is the LRATC created ? combination of multiple SRATC

How do you determine whether to use the smaller plant size or larger? Examine the quantity produced and then find the SRATC s vertically for their ATC.

Demonstrate economies of scale using a graph.

Explain the relationship between input and outputs when a firm is experiencing increasing economies of scale.

Teacher Simulation- Set up a factory assembly line -

In the past I used this simulation along with the law of diminishing returns. When the MP falls and the ATC bottoms, then you give the group another fixed capital item. I used staplers for the fixed item and so each time ATC bottoms you need another stapler. You could also use desk space as your fixed capital and give students another desk each time ATC hits bottom.