Graphically, LAC can be derived from the Short run Average Cost (SAC) curves. It can be calculated by the division of LTC by the quantity of output. Long run average cost (LAC) can be defined as the average of the LTC curve or the cost per unit of output in the long run. The locus of all these points gives us the LTC curve. In graphically deriving the LTC curve, the minimum points of the STC curves at different levels of output are joined. Thus, it can be less than or equal to the short run average costs at different levels of output but never greater. It is the least cost of producing a given level of output. Long run total cost refers to the minimum cost of production. Thus, you can well imagine no difference between long-run variable cost and long-run total cost, since fixed costs do not exist in the long run. The firm can increase the size of the plant in the long run. Thus, the long run consists of variable inputs only, and the concept of fixed inputs does not arise. The long run refers to that time period for a firm where it can vary all the factors of production.
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