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A Level Economics:

Qamar Baloch

Qamar Baloch

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Envelope Curve is Long run average cost curve which is constructing by taking into account the short run average cost curves. We take different short run cost curves, at the start minimum point of short run AC would be higher and it continues falling after reaching the minimum point it starts rising. you will have to draw a tangent of initial short run AC from its falling point then draw tangent from the minimum point of minimum short run AC curve which would be a separate curve and then draw tangent at the rising part of another short run AC curve. In this way, if you join these tangents you will get long run AC curve which is termed as envelope curve.
 
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