Long run equilibrium, Microeconomics

In the short run, the size of the plant is fixed whereas in the long run a firm can adjust its plant size. One of the choices in the long run will be the short run plant size. That is, a particular level of output will be the optimum choice in both periods. So, short run average cost curves must be tangent to the long run average cost curve. A long run involves several short runs. Consequently, the long run average cost curve will be the lower envelope of the short run cost curves.

The firm chooses that amount of fixed factors to minimize the average costs. In the long run marginal cost curves will consist of different parts of the short run marginal cost curves for each level of the fixed factor. The long run MC will be u-shaped and will intersect the long run average curve at the minimum.

1778_Long Run Equilibrium.png

Posted Date: 3/13/2013 1:07:20 AM | Location : United States







Related Discussions:- Long run equilibrium, Assignment Help, Ask Question on Long run equilibrium, Get Answer, Expert's Help, Long run equilibrium Discussions

Write discussion on Long run equilibrium
Your posts are moderated
Related Questions


What are the major differences between the equilibrium of profit maximiser and sales revenue maximiser?

Consider a thin transparent plate whose thickness d(x,y) is a square (instead of a sinusoidal) periodic function of x of period Δ=λ. Show that the angle θ between the diffracted wa

ACHIEVEMENTS OF BRETTON WOODS INSTITTUTIONS: Some of the important achievements of the BW Institutions can be summarised as follows: 1) International reserves have increa

Q. Explain about Contingent valuation? Evaluation of willingness to pay for a specified environmental resource or a change in the resource, through use of structured questionna

Problem : (a) Using examples of Least Developed Countries, explain the: (i) causes of market failures; and (ii) consequences of market failures (b) Describe the common

Explain the micro and macro economic issues that can be represented on the PPC

IN THE LABORATORY OXYGEN IS PRODUCED BY HEATING POTASSIUM CHLORATE ACCORDING TO THE EQUATION 2KCLO3-2KCL+3O2. WHEN 298g OF KCLO3 IS HEATED IT GAVE 181.2g OF OXYGEN. GIVEN THAT 32g

looking for information to complete essay, info looking for What is elasticity and its calculations for the price of a lap top, that increases by 20% and there is a 40% drop in qua