In the long run a firm has time to change any and all aspects of production. It can purchase new equipment, build or tear down factories, move to another location, or change the methods it uses.

This means that, in the long run, there is no distinction between fixed and variable costs; everything is variable. This, in turn, means there is no principle like the law of diminishing returns (see the section on Diminishing Returns) to guide our understanding of long run costs.

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