Long Run Marginal Cost Curve (LMC)

Like the short run marginal cost curve, the long run marginal cost curve is also derived from the slope of total cost curve at the various points relating to the given output each time. The shape of LMC curve has also a flatter U shape indicating that initially as output expands in the long run, LMC tend to decline.

At a certain stage however, LMC, tends to increase. The behaviour of LMC is shows in fig

From the above fig., the relationship between LAC and LMC may be traced as follows:-

  1. When LAC is decreasing, LMC is below LAC.
  2. LMC is equal to LAC, when LAC is at its minimum point.
  3. LMC is above LAC, when LAC is rising.

 

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By Hassham

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