Long Run Average Total Cost LRATC
Definition of 'Long Run Average Total Cost LRATC'
Business costs over the long term are usually lower than when measured over the short term because the initial investment cost in machinery and hardware can be amortized over a long period.
If Intel (INTC), for example, were to build a new large chip factory in Malaysia then over time the economies of scale and the time over which the costs are spread would reduce the costs when compared to its older factories giving it a lower LRATC.
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