the long-run average cost curve

The long-run average cost curve shows how a company's costs per unit of output change as it increases production over time, allowing all inputs to be adjusted. Typically, it starts high, decreases as the company benefits from efficiencies, reaches a lowest point where production is most cost-effective, then rises again if production becomes too large and causes inefficiencies. This curve helps businesses identify the most efficient scale of operation and plan long-term production strategies to minimize costs while meeting demand.