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

Fiscal Imbalance: The persistent rise in resource gap has led to a growing volume of public debt. The central feature that emerges is a serious fiscal imbalance, arising from

#queIn a particular year, an organization earns cash revenues of Rs. 2,00,000. Total material and labour expenses are Rs. 1,09,000. The depreciation claimed on the equipment is Rs.

what is pooling equilibrium

what is the importance of law of supply

Q. Defien Hyper - Inflation? Hyper-Inflation:It's a situation of extremely rapid inflation (reaching 100% per year or more), frequently resulting from a condition of political

what is the explanation about supply analysis?How to understand?

1.  Clorox lowers the price of its GreenWorks TM bathroom cleaner.  All other things remaining the same, choose how you think this will impact the market price of Pine-Sol. (Circl

Prove that utility approach and indifference curve yield the same consumer equilibrium

First Degree Price Discrimination - The monopolist sells different units of the commodity at different prices which differ from person to person. Second Degree Price Discriminat