Long Run Incremental Cost

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Long Run Incremental Cost

A foreseen, future change in the incremental cost to a company, which is the cost of a company producing one more unit of a product. Long run incremental costs are likely changes to the inputs of making a product, such as the cost of raw materials. For example, if making a product requires a significant amount of oil, and oil prices are thought to be likely to decline, the long run incremental cost is also likely to decline. While there is no guarantee that the long run incremental cost will change in the exact amount expected, attempting to calculate it helps a company make future investment decisions.
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In March 2010, Sutel adopted the Long Run Incremental Costs (LRIC) model to calculate access and interconnection rates between operators.