Long-Run Cost Concepts:
In the long run, all factors of production are variable. Therefore, all costs are variable. The long-run average cost curve is a planning curve in the sense that it is a guide to the entrepreneur in his decision to plan the future expansion of his output. In this period, firms can plan to change their capacities or scale, which is prompted by the desire to reduce cost of production. This period is characterized by a number of possible capacities.