Explain why the average cost curve for the long run differs from that for the short run
The average cost curve for the long run differs from that for the short run because, in the long run, input quantities generally become variable.
For example, in the short run, a chicken breeder can raise, at most, only the number of chickens that she can crowd into her coops' current capacity. She can build more chicken coops, but if it turns out that they are much larger than she needs, she cannot simply undo the excessive space and get her money back. But in the long run, when the coops need to be replaced, she can choose among new coops of different sizes.
Thus, in the long run, a firm will select the plant size that is most economical for the output level it expects to produce.
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The efficient scale of a firm is defined as the point where
A) average total cost is minimized. B) marginal revenue equals marginal cost. C) price equals marginal cost. D) marginal revenue equals zero.
The standard of living in a nation depends on
A) how well its economy functions relative to other countries. B) the size of the country, with larger nations always doing better than smaller ones. C) how well the economy functions within that country. D) whether or not its currency is adopted as the world's monetary standard.
Which of the following is an example of a physical constraint?
a. The work you can perform on 1,500 calories a day. b. The wages you can earn against each hour of work. c. The bank balance of an individual at any point of time. d. The contract price at which you agree to sell your house.
In general, the demand curve facing the monopolistically competitive firm is more elastic than the demand curve facing the perfectly competitive firm.
Answer the following statement true (T) or false (F)