What is the supply curve of a firm in the long run?
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What is the supply curve of a firm in the long run?
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Let's create a long-run supply curve for a company. We divide the derivation into two sections when dividing the short-run curve. When the market cost price is larger than or equal to the minimal (long-run) AC, we first determine the enterprise's profit-maximizing production degree.

 When the market cost price is less than the minimal (long-run) AC, we determine the enterprise's profit-maximizing output degree.

Case 1: A price that is greater than or equal to the LRAC minimum

 Assume the market cost price is p1, which is higher than the LRAC minimum. We obtain the output degree q1 by equating p1 with LRMC on the ascending part of the LRMC curve.

 It's also worth noting that the LRAC at q1 does not exceed the p1 market cost pricing. As a result, at q1, all three conditions in section 3 are met. As a result, when the market cost price is p1, the enterprise's supplies are equal to q1 in the long term.

Case 2: Price Below the LRAC Minimum Assume the market cost price is p2, which is lower than the LRAC minimum. If a profit-maximizing firm produces a positive production over time, the market cost price, p2, must be larger than or equal to the LRAC at that output level. In other words, the company is unable to produce a profit. As a result, when the market cost price is p2, the firm produces nothing. We can draw an important conclusion by combining instances 1 and 2.

 The increasing component of the LRMC curve from and above the minimum LRAC, as well as the zero production for all cost prices less than the minimum LRAC, is an enterprise's long-run supply curve.
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