Economics Short Run Vs Long Run Costs Questions
In the long run, marginal cost refers to the additional cost incurred by a firm when it increases its production by one unit. It takes into account all the variable and fixed costs associated with producing that additional unit. Unlike in the short run, where some costs may be fixed and cannot be changed, in the long run, all costs are variable and can be adjusted. Therefore, the long-run marginal cost reflects the overall efficiency and productivity of the firm's operations as it considers the impact of changes in both variable and fixed costs on the production process.