Industries which appear to exhibit Increasing Returns to Scale
may just be ones where market demand is considerably smaller than
Min ES; while industries which exhibit Decreasing Returns to Scale may
just be ones in which market demand is significantly above Max ES.
To the left of Min ES the LRMC curve is below the LRAC curve, while to the right of Max ES the LRMC curve is above the LRAC.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved