The Relation between Long-Run and Short-Run Average Costs Homework Help

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In economics, distinction between long run and short run is crucial for explaining varying levels of output produced in each case. This happens due to variable and fixed factors of production that have their profound influence on the cost of production too. Average cost, however, is total cost divided by total output produced. To get a better understanding of these ideas and for perfect solutions to your coursework problems, take The Relation between Long-Run and Short-Run Average Costs homework Help for maximum benefits in your economics projects.

What is the Relation between Long-Run and Short-Run Average Costs?
Short run production is characterized with output produced keeping capital constant. In the long run, a firm no longer has any constraint in its factors of production. It can decide to produce as much output it wishes by employing as many factors as it can. Here firms can enter or exit the industry too. Long run average cost is the minimum cost at which a firm can produce any output in long run.

Short run average cost is the short run cost of output at constant capital and is thereby said to be fixed. The long run average cost curve is the envelope of all short-run average total cost curves. Both these cost curves are U-shaped, which is indicative of the fact that even at zero levels of output there will be some positive cost. This cost arises from fixed cost of operating machinery.

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