Explain long run cost
Understand the Problem
The question is asking for an explanation of the concept of long run cost in economics. This typically refers to the total cost incurred by a firm in the long run where all factors of production can be varied, and it contrasts with short run costs where at least one factor of production is fixed.
Answer
In the long run, all factors of production are variable, allowing firms to adjust production and costs over time.
The long-run cost is the cost associated with a firm's production when all factors of production are variable. It involves managing production levels to respond to expected economic outcomes, allowing firms to adjust all costs over time.
Answer for screen readers
The long-run cost is the cost associated with a firm's production when all factors of production are variable. It involves managing production levels to respond to expected economic outcomes, allowing firms to adjust all costs over time.
More Information
Long-run costs help firms determine the most efficient scale of production by adjusting usage of resources. This includes changing plant sizes or shifting labor to meet long-term demand changes.
Sources
- The Structure of Costs in the Long Run - Saylor - learn.saylor.org
- Long Run: Definition, How It Works, and Example - Investopedia - investopedia.com
- Long Run Costs - Definition - BYJU'S - byjus.com
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