Long Run Marginal Cost
In The long run all inputs are variable because costs that are fixed in the short run can be changed if the planning horizon of the producer is long enough. Accordingly, there are no Total Fixed Cost or Average Fixed Cost Curve in the long run .There is no distinction between total cost and total variable costs . We simply use the term total cost similarly there is no distinction between average total costs and average variable costs and we will use the term long run average cost .This is denoted by LAC. Where L Stand for long run the concept of same how ever we will abbreviate it to LMC. In what follows we discuss the shapes of the LAC and LMC Curves the reasons behind their shapes and the relationship between them. Shapes and the relationship between them. Like the short run average and marginal cost curve the LAC and LMC Curve cuts the LAC at its minimum Point. How ever the reason behind the U-shape is not the law of diminishing returns . Instead of all inputs are variable it is the pattern of determines the U-shape of the curves.