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3.3 Long-Run Production Costs

Part of Production, Cost, and the Perfect Competition Model in AP® Microeconomics. Read the opening section, then create a free account for the full interactive lesson, practice, and progress tracking.

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Key Concepts of Long-Run Costs

  • Long Run: A time period where all inputs can be varied, meaning there are no fixed costs.
  • Economies of Scale: Cost advantages achieved when increasing production lowers the average cost per unit.
  • Diseconomies of Scale: Cost disadvantages that occur when increasing production raises the average cost per unit.
  • Constant Returns to Scale: A situation where increasing production does not change the average cost per unit.
  • Minimum Efficient Scale: The point at which Economies of Scale finally end, indicating the minimum point of production to be fully efficient.

In this unit

7 lessons

  1. 3.1The Production FunctionPreview lesson
  2. 3.2Short-Run Production CostsPreview lesson
  3. 3.3Long-Run Production CostsThis lesson
  4. 3.4Types of ProfitPreview lesson
  5. 3.5Profit MaximizationPreview lesson
  6. 3.6Firms’ Short-Run Decisions to Produce and Long-Run Decisions to Enter or Exit a MarketPreview lesson
  7. 3.7Perfect CompetitionPreview lesson

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