As will be shown in the next section, a simple production such as q = [2K.sup.1/4][L.sup.1/4] with fixed factor prices and no long-run fixed costs generates a diseconomies of scale LRAC of
The linear LRAC gives way to a quadratic LRAC once the existence of a long-run avoidable fixed cost--call it Z--is assumed.
Such a LRAC function and its associated SRACs, have the general shapes seen in Figure 5.
Figure 10 shows the resulting LRAC and both the SRAC with K = 1 and another SRAC with K = 4.
The resulting LRAC and SRACs can account for all possible economies of scale as shown in Figure 11.
"Son and wife gave promissory notes to the GRAT for the 'purchase price' of the LRAC, the proceeds of which are paid to Pat Riley Sr.
"We understand that the transfer of the LRAC was structured in three separate transfers so that only a minority interest would be transferred in each separate transaction.
Riley presented financial statements to [ATRS] showing that he still owned the LRAC.
Riley's explanations about the sale of the LRAC are correct, then the financial statements given to and relied upon by [ATRS] were fraudulent.
"Litigation is always uncertain, costly and time consuming, and we cannot guaranty any specific result; however, we believe that at the end of the day, [ATRS] would be successful in setting aside the LRAC sale and would be the holder of a nodischargeable guaranty obligation from Pat Riley Sr.
"We are concerned that the value of the LRAC and other assets may decline significantly during this process which, given the nature of the allegations, the social prominence of Riley and the involvement of [ATRS], is sure to attract active interest of the press.
"As a result, the dollar amount of [ATRS]'s ultimate recover[y] from the LRAC (if any) is impossible to estimate at this time.