Explain the concept of average total costs in the long run.

Explain the concept of average total costs in the long run.

Average total costs in the long run refer to the average cost per unit of output when all inputs are variable and can be adjusted. In the long run, a firm can change its scale of production by adjusting its inputs, such as labor and capital, to achieve the most efficient level of production. Average total costs in the long run take into account all costs, including both fixed and variable costs, and are calculated by dividing the total cost by the quantity of output produced. This measure provides insights into the overall efficiency and competitiveness of a firm in the long run.