Long - hence, all costs are variable. The long-run average...

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Long Run Costs In the short-run, some factors of production are fixed. Corresponding to each different level of fixed  factors, there will be a different  short-run average total cost curve  (  SATC ). The average total cost  curve is just one of many  SATCs  that can be obtained by varying the amount of the fixed factor, in  this case, the amount of capital.  Long-run average total cost curve.  In the long-run, all factors of production are variable, and 
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Unformatted text preview: hence, all costs are variable. The long-run average total cost curve ( LATC ) is found by varying the amount of all factors of production. However, because each SATC corresponds to a different level of the fixed factors of production, the LATC can be constructed by taking the lower envelope of all the SATCs , as is illustrated in Figure 1 . Figure 1 Short- and long-run average total cost curves...
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