make it easier for illegal activities as well as legal ones. The future of cities, both in the United States and in other
180 7 • Production, Costs, and Industry Structure

countries around the world, will be determined by their ability to benefit from the economies of agglomeration and

to minimize or counterbalance the corresponding diseconomies.

We illustrate a more common case in Figure 7.11 (b), where the LRAC curve has a flat-bottomed area of

constant returns to scale. In this situation, any firm with a level of output between 5,000 and 20,000 will be

able to produce at about the same level of average cost. Given that the market will demand one million

dishwashers per year at a price of $500, this market might have as many as 200 producers (that is, one million

dishwashers divided by firms making 5,000 each) or as few as 50 producers (one million dishwashers divided

by firms making 20,000 each). The producers in this market will range in size from firms that make 5,000
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