Can somebody explain to me how in long run equilibrium, the LRMC=Long run average total cost (LRATC) at the minimum of LRATC? I mean, how do I get the long run marginal cost if given a production function such as Q=10KL?
Thank you very much.
Can somebody explain to me how in long run equilibrium, the LRMC=Long run average total cost (LRATC) at the minimum of LRATC? I mean, how do I get the long run marginal cost if given a production function such as Q=10KL?
Thank you very much.
LRMC=LRATC because the fixed cost component of ATC goes to zero as production approaches infinity.
I don't believe you can discover the LRMC just by looking at the production function Q=10KL. That production function will give you something like a production possibilities frontier if you try entering lots of different variables into it - so it tells you how much you CAN produce, but it doesn't say what it will cost.
I'm guessing there is some other information that you haven't posted. I'll save further comments until then.