sizes. If the LRAC curve has a single point at the bottom, then the firms in the market will be about the same

size, but if the LRAC curve has a flat-bottomed segment of constant returns to scale, then firms in the market

may be a variety of different sizes.

The relationship between the quantity at the minimum of the long-run average cost curve and the quantity

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7.5 • Costs in the Long Run 181

demanded in the market at that price will predict how much competition is likely to exist in the market. If the

quantity demanded in the market far exceeds the quantity at the minimum of the LRAC, then many firms will

compete. If the quantity demanded in the market is only slightly higher than the quantity at the minimum of

the LRAC, a few firms will compete. If the quantity demanded in the market is less than the quantity at the

minimum of the LRAC, a single-producer monopoly is a likely outcome.

Shifting Patterns of Long-Run Average Cost
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