question
The long run is:
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a period of time in which all factors of production are variable
question
Marginal cost (MC) is:
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change in TC/Q, change in TVC/Q, and not affected by the level of fixed costs
question
If marginal cost is greater than average total cost, then:
answer
average total cost is rising
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In the short run, average variable cost can be obtained by each of the following
answer
ATC-AFC, TVC/Q, TC/Q-TFC/Q
question
Costs that change as the level of output changed are called:
answer
variable costs
question
The typical pattern for a firm to experience:
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economies of scale initially, followed by constant returns to scale until reaching a production level high enough for diseconomies of sale to kick in
question
In the long run:
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all inputs are variable, and average costs may decrease, remain constant or increase as the scale of production changes
question
The long-run average cost (LRAC) is U-shaped due to:
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the existence of economies and diseconomies of scale
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If a firm is experiencing economies of scale, doubling inputs will:
answer
more than double output
question
What is most likely true of economic and accounting profits?
answer
economic profits are less than accounting profits
question
The short run is a period of time:
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in which a firm uses at least one fixed input
question
The long run is a period of time:
answer
sufficient length to allow a firm to alter its plant size and capacity and all other factor of production
question
The law of diminishing returns implies that, in the short run:
answer
the marginal product of the variable input must eventually decrease
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