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
Protection against dumping: It could be looked at as the export of commodities priced below cost of production. Dumping is generally looked upon as an unfair trading practice

About Bounce Fitness Bounce Fitness provides a range of services and arrange various sessions and programs in the area of fitness that helps to the people to be healthy. The

Jane receives utility from days spent travelling on vacation domestically(D) and days

assume you are selling a product and when your price is decreased by 29% your quantity demanded increases by 55%. What is your price elasticity of demand?

Budget Constraints   * The Budget Line - The budget line indicates all the combinations of 2 commodities for which total money spent equals the total income. * The Budget

Mg(OH)2 + 2HCl-----> MgCl2 +2H2O how many grams of magnesium chloride can be produced from 14.60mL of a 0.546M hydrogen chloride solution?

1. Econ 415 Project Select one time series of real data. The series can be selected from the published data ( http://research.stlouisfed.org/fred2/). The data series must co

Suppose the demand curve for a consumer for coffee is: Q = 6 – 2P, where Q represents the number of cups per day and P is the price of coffee per cup.  Question: Sppose the co

If coolest icecream parlor has been closing at 5pm with $120 of marginal revenue and $80 of marginal cost for the last hour open, what should coolest icecream do to maximize profit

The following are AC and TC functions for various firms (i). AC = 140/Q + 20 (ii) AC - a/Q = k (iii) TC - 10 =2Q + 0.1Q 2 (iv) TC - k - βQ = cQ 2 Where a, k, β and