Presentation On Types Of

Costs (Long-run)

Name: Raj Pratap Singh

BBA(LSCM)
21SLAM1010038
Business Economics
 What is long run cost?
• Long run means time period being long enough to make the
entire productive factors variable.
• In long run all factors of production become variable.
• The entrepreneur has number of choices to change the plant
size and level of outputs.
• The long run AC curves is derived from short run AC curves.
 There are three types of long run cost:-

1).Total cost :- The sum of all costs incurred by a firm in producing

a certain level of output. i.e
TC=TFC+TVC
2).Average cost :- It is obtained by dividing the total cost
(TC) by the total output (Q), i.e
AC=TC/Q.
3).Marginal cost:- It is the addition to the total cost on account of
producing and additional unit of the product or marginal cost is the
cost of marginal unit produced.
MC= TC/ Q