Long Run

How a Long Run Works A long run is a time period during which a manufacturer or producer is flexible in its production decisions. Businesses can either expand or reduce production capacity or enter or exit an industry based on expected profits. Firms examining a long run understand that they cannot alter levels of production in order […]

Characteristics of Long run Average Cost Curve

  The following characteristics of LAC curve should be noted The LAC curve is tangential to the various SAC curves. It is drawn to cover them and is often drown as Envelope curve as no point as SAC curve can ever be below the LAC curve. The LAC curve is U-shaped of like a dish. […]

Cost Analysis in the Long Run ( Period)

The long Period The long period is defined as the period that is long enough for the inputs of all factors of production to be varied. In this period no factor is fixed, all are variable factors. Firm has enough time to change its scale of production. It can purchase and install new machinery or […]

TYPES OF COSTS

There are many different types of costs that a firm may consider relevant for decision-making under varying situations. The manner in which costs are classified or defined is largely dependent on the purpose for which the cost data are being outlined. Explicit and Implicit Costs: The opportunity cost (or cost of the foregone alternative) of […]