In this context, technology refers to all alternative methods of combining inputs to produce outputs. In planning for the long run, the firm will compare alternative production technologies, or processes. A firm can build new factories and purchase new machinery, or it can close existing facilities. If you have a one-year lease on your factory, then the long run is any period longer than a year, since after a year you are no longer bound by the lease. The long run depends on the specifics of the firm in question-it is not a precise period of time. The long run is the period of time when all costs are variable. Analyze cost and production in the long run and short run.Interpret graphs of long-run average cost curves and short-run average cost curves.Identify economies of scale, diseconomies of scale, and constant returns to scale. Learning ObjectivesBy the end of this section, you will be able to do the following:
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