True, A firm adjusts the size of its plant to the volume of production as it advances along its long-run average cost curve. All short-run cost curves are on or above the long-run average cost curve because long-run enterprises have more flexibility.
The Long Run Average Cost Curve demonstrates how a firm's average costs change over time. Because of economies of scale, the average cost rises less proportionately to output along the downward sloping region of the curve. How much competition is anticipated to exist in the market will be predicted by the relationship between the amount at the minimum of the long-run average cost curve and the quantity sought in the market. Numerous businesses will compete if the market's volume demands are significantly higher than the LRAC's minimum volume.
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