It is the long-run cost curve that is also referred to as the average cost curve. This is the average price that the firms will pay to the firm and the rate of return. This is since the long-run cost is the price of output. The long-run cost curve can also be considered as the average cost curve. P is the variable in the production function. K is the constant of the production function and L and P are the variables to the production function. Where K is a constant, L is the level of output (the amount of goods that the economy produces per hour of labour) and P is the output price (the rate of output that the economy receives per hour of labour). Where: Cobb-Douglas Production Function is given by The Cobb-Douglas production function is described below: The Cobb-Douglas Production Function is a production function that can be used to explain the production, consumption and income of an economy. It follows that the long-run cost curve for a plant is in fact the average cost of the plant and the rate of return. In the long-run cost curve, we see that for every increase in the output size, the long-run cost of the plant increases. If the long-run cost curve is plotted on the x-axis and the size of the plant on the y-axis, the slope will show the long-run cost of the plant. It is the slope of the long-run cost curve. It compares the total cost of a plant with its output size. The long-run cost curve is also referred to as the marginal cost of the plant.
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