| Long Run Marginal Cost |
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Information AboutLong Run Marginal Cost |
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| economics of production | |
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A generic firm can make these changes in the long-run:
''Long run marginal cost'' (''LRMC'') refers to the cost of providing an additional unit of Service or Commodity under assumption that this requires investment in capacity expansion. LRMC pricing is appropriate for best Resource Allocation , but may lead to a mismatch between operating costs and revenues. In Macroeconomic models, the long run assumes full factor mobility between economic Sectors , and often assumes full Capital mobility between nations. The concept of ''long run cost'' is used in cost-volume-profit analysis and product mix analysis. A famous use of the phrase was by John Maynard Keynes , who said in dry humor, "In the long run, we are all dead." SEE ALSO |
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