## Deriving the Long Run Total Cost Curve

The long run total cost curve (LRTC) shows the relationship between total cost (TC) and output (Q). It is derived from the long run average cost (LRAC) curve, which is derived from the long run marginal cost (LRMC) curve. It is important to understand the concepts of long run average cost (LRAC) and long run marginal cost (LRMC) so that a firm can determine the most efficient and cost-effective production level.

## Long Run Average Cost Curve

The long run average cost (LRAC) curve shows the relationship between the long run average cost (LRAC) and output (Q). This curve is derived from the long run marginal cost (LRMC) curve which shows the relationship between the long run marginal cost (LRMC) and output (Q). The LRAC curve is U-shaped, meaning that the LRAC is initially high and then decreases with increasing output. Eventually, the LRAC reaches a minimum point and then begins to rise again as output increases.

## Long Run Marginal Cost Curve

The long run marginal cost (LRMC) curve shows the relationship between the long run marginal cost (LRMC) and output (Q). The LRMC is the additional cost associated with producing one more unit of output. The LRMC curve is U-shaped, meaning that the LRMC is initially high and then decreases with increasing output. Eventually, the LRMC reaches a minimum point and then begins to rise again as output increases.

## Derivation of Long Run Total Cost Curve

The long run total cost (LRTC) curve is derived from the long run average cost (LRAC) and long run marginal cost (LRMC) curves. The LRTC curve is derived by adding the LRAC and LRMC curves together. The LRTC curve is also U-shaped, meaning that the LRTC is initially high and then decreases with increasing output. Eventually, the LRTC reaches a minimum point and then begins to rise again as output increases.

## Related Questions

• What is the difference between long run and short run total cost curves?
• What is the long run marginal cost curve?
• How is the long run average cost curve derived?
• What is the relationship between long run marginal cost and long run average cost?
• What is the relationship between long run marginal cost and long run total cost?
• What is the relationship between long run average cost and long run total cost?
• What is the shape of the long run total cost curve?
• What factors affect the shape of the long run total cost curve?
• How can firms use the long run total cost curve to make decisions?
• What is the relationship between short run total cost and long run total cost?