Eliminating Hal Varian's Optimal Scale of Production
ebook ∣ Profit Economics Series
By Hak Choi
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Hal Varian reproduced Edward Chamberlin's average total cost (ATC) curve and called its minimum the optimal production scale. This book reveals that his claim was cheating and that minimum ATC itself is also deceptive. Subsequently, Varian tried to minimize total cost, but he forgot to set his derivative to zero. This book further proves that cost minimization is not a correct objective. Using profit maximization, this book proves that ATC-minimum or optimal scale has zero output.