Economics Short Run Vs Long Run Costs Questions
Long-run costs in economics refer to the total costs incurred by a firm when all inputs, including both fixed and variable factors, can be adjusted. In the long run, a firm has the flexibility to change its production capacity, such as expanding or reducing the size of its plant, hiring or firing workers, and altering the quantity of raw materials used. Therefore, long-run costs encompass all expenses associated with these adjustments and reflect the firm's ability to optimize its production process and achieve economies of scale.