What Is Long Run Costs?
According to the long run, all inputs are variable. There is no fixed cost. Hence, the total cost and the total variable cost coincide and concur in the long run. Long-run average cost (LRAC) is the cost price per unit of the result (output), i.e.,
LRAC = TC/q
The long-run is a spell of time in which all factors of manufacturing and costs are variable. In the long run, enterprises are capable of modifying all cost prices, whereas, in the short run, enterprises are only capable of impacting cost prices through modifications made to production degrees.
There is no difference between the LTC or LRTC (long-run total costs) and long-run variable costs as there are no fixed costs. It denotes the capability of an establishment of changing inputs and sanctions it to manufacture at less price in the long run.
This concept was about the long-run costs. To learn more about such interesting concepts of commerce, keep visiting our website.