Explain the difference between the short run and the long run.
What will be an ideal response?
The short run is the period of time over which at least one factor of production is fixed. In the long run, firms are flexible to adjust all factors of production, and to enter or exit the industry.
You might also like to view...
One reads the following in a newspaper: "Today the president and Congress agreed to impose new restrictive quotas on Japanese cars coming into the country." As a result, an economist would predict that the
A) supply of cars in the country will remain the same and the (average) price of cars will fall. B) supply of cars in the country will fall and the (average) price of cars will rise. C) supply of cars in the country will rise and the (average) price of cars will fall. D) demand for cars in the country will fall and the (average) price of cars will rise. E) demand for cars in the country will rise and the (average) price of cars will rise.
When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is
A) $41.43.
B) $134.29.
C) $135.
D) $145.
Command-and-control approaches to reducing pollution can be criticized on the grounds that they may be all of the following EXCEPT
A. inflexible. B. overly expensive. C. politically unpopular. D. counterproductive.
Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $22, the firm will
A) shut down. B) leave the market in the long run. C) stay in the market in the long run. D) incur an economic loss.