The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3

-The phrase "to spread the overhead" refers to reducing the costs that are not directly attributable to the production process.

Question

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
 
-The phrase "to spread the overhead" refers to reducing the costs that are not directly attributable to the production process.

Quizplus · Accepted Answer

Spreading the overhead refers to distributing the costs that are not directly incurred in the production process, such as rent or administrative expenses, among the units produced in order to reduce the average cost per unit. This helps in achieving economies of scale and lowering the Long Run Average Total Cost (LRATC) curve.

The Figure Given Below Shows Three Short Run Average Total