Economies of scale is the downward sloping portion of the LRAC curve. Diseconomies of scale is the upward sloping portion of the LRAC curve. Economies of scope relates to the LRAC curve in that these cost savings shift the LRAC downward. Technological change also shifts the LRAC curve downward Identify the three methods by which firms acquire inputs. Summarize the considerations that lead to the choice of one method over the others.
Successful managers build reputation that is rewarded with higher compensation.
Takeovers Ineffective managers face replacement through competition for corporate control. Entrepreneurs profit by buying stock, taking-over the board of directors, replacing management, and enhancing the profitability of the firm. Incumbent management has incentive to be efficient. A measure of concentration which sums the market shares of the four largest firms in the industry. A measure of concentration which sums the squared market shares of all firms in the industry.