The graphs suggest that as long run adjustments consequently occur, the firms in the industry will find that profits will increase.
What is Long Run?
- The long run is a time frame during which all cost and production parameters are erratic. In the long run, businesses can modify all costs, however in the short run, they can only affect pricing by changing production levels. Additionally, a company may anticipate competition in the long run even though it may have a monopoly in the short term.
- The LRAC curve, along which a business would try to reduce its cost per unit for each specific long run quantity of output, is connected to the long run.
- Internal economies of scale are utilized while the LRAC curve is dropping, and vice versa.
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