Question

Why the Long-Run Average Cost is curve U-shaped and flatter in the long-run? Explainwith suitable diagrams.

Answer 1

Long run average curve or LAC is calculated by dividing total cost in the long run by the level of output. In the short run, some factors are fixed and others can be varied to increase the level of output. But in the long run, none of the factors are fixed .



In the long run, larger output can be