2. Suppose we have a single product firm. The firm uses normal, full costing with a normal...
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2. Suppose we have a single product firm. The firm uses normal, full costing with a normal volume equal to its efficient scale or output level
(where average economic cost is a minimum). The LLA is constructed by setting the slope equal to marginal cost at the efficient output level and the intercept so the two total cost expressions agree at that point.
Why is there no difference between full and variable costing in this instance?
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