CBSE Class 11-commerce Answered
explain the production cost in long period
Asked by rksharmaramjas | 20 Jan, 2020, 07:59: PM
Expert Answer
- In the long run, all the inputs are variable. Hence, there is no distinction between variable costs and fixed costs. All costs are variable cost in the long run.
- Shape of long run total cost (LTC) remains the same as short run total costs. Initially, LTC curve increases at a diminishing rate then it tends to increase at a constant rate and finally it rises at an increasing rate. This curve starts from the origin because all the costs are variable cost which varies with output.
- Therefore, when output is zero, the variable costs are also zero.
- Long run average cost is defined as cost per unit of output. Long run marginal cost is the change in total cost per unit of change in output.
- The sum of all marginal costs up to certain output level gives the total cost at that particular level.
- Like short run average and marginal cost curves, long run average and marginal cost curves are also U-shaped.
Answered by Christina | 21 Jan, 2020, 02:19: PM
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