Short run economic costs must be lower than long run economic costs because long run economic costs include the cost of inputs that are fixed in the short run (and thus are not part of short run cost).
Answer the following statement true (T) or false (F)
False
Rationale: Most of the statement is true -- except for the first part. It is true that the expense on capital is not a cost in the short run. But suppose that capital was fixed at a relatively low level in the short run, and suppose that we considered the cost of producing a high level of output. It may be that the cost associated with all the labor that is needed (given the low level of capital) is higher than the long run cost of both labor and capital when capital can be adjusted to its optimal level (given the high level of output).
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Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct?
A. Dan has the comparative and absolute advantage in smoothies. B. Dan has the comparative and absolute advantage in sandwiches. C. Dan has the comparative advantage in smoothies, but Tracy has the absolute advantage in smoothies. D. Dan has the comparative advantage in sandwiches, but Tracy has the absolute advantage in sandwiches.
The federal government awards a patent holder the exclusive right to make, use, and sell an invention for a period of
A) 20 years. B) 17 years. C) unlimited period. D) 100 years.
Currency reserves on account with the International Monetary Fund used to settle accounts between countries are known as
A) federal reserves. B) official reserve account transactions. C) unilateral transfer. D) special drawing rights.
When equilibrium GDP falls below potential GDP, an inflationary gap exists
a. True b. False Indicate whether the statement is true or false