Glossary · Micro · Production and costs

Long-run average cost (LRAC)

The lowest cost per unit at each output once the firm can choose any plant size. It is the envelope wrapped under all the short-run average cost curves, and its shape shows economies and diseconomies of scale.

Also called: LRAC, long-run average total cost, LRATC

Taught in: Long-Run Average Cost

Related terms

Economies and diseconomies of scaleMinimum efficient scale (MES)Average total cost (ATC)

More from production and costs

Average fixed cost (AFC)Average product of labor (APL)Average variable cost (AVC)Cobb-Douglas production functionFixed cost (FC)Isoquant

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