Question

why is a LAC curve known as envelope curve? does this curve help from to plan to produce desired output?​

Answer 1

Answer:

A long run average cost curve is known as a planning curve. This is because a firm plans to produce an output in the long run by choosing a plant on the long run average cost curve corresponding to the output. It helps the firm decide the size of the plant for producing the desired output at the least possible cost.

Answer 2

Answer:

The LAC curve will, therefore, be U-shaped like the short-run cost curves, but its U-shape will be less pronounced than that of the short-run cost curves. It will be flatter. That is why the long-run cost curve is called an 'Envelope', because it envelops all the short-run cost curves.

Explanation: