  The formation of dust with temperature-dependent non-grey opacity is
considered in a series of self-consistent model atmospheres at different phases
of an O-rich Mira variable of mass 1.2 $M_\odot$. Photometric and
interferometric properties of these models are predicted under different
physical assumptions regarding the dust formation. The iron content of the
initial silicate that forms and the availability of grain nuclei are found to
be critical parameters that affect the observable properties. In particular,
parameters were found where dust would form at 2-3 times the average continuum
photospheric radius. This work provides a consistent physical explanation for
the larger apparent size of Mira variables at wavelengths shorter than 1 $\mu$m
than that predicted by dust free fundamental-mode pulsation models.
