Comment on the following statement: "The shape of the long-run average cost curve is determined by diminishing returns."
What will be an ideal response?
The statement is false. Diminishing returns occurs in the short run, as the firm adds units of a variable input to a fixed input. In the long run, there are no fixed inputs. The shape of the long-run average cost curve depends on how costs are affected by changes in the firm's scale of production.
You might also like to view...
Maintaining a fixed exchange rate over the long run is today
A) virtually impossible. B) more vulnerable to speculative attacks than in the past. C) preferable. D) possible only in special cases such as maintaining strict capital controls. E) aided by technology which allows instant movement of money between financial markets in different countries.
Suppose all people have the same age-earnings profile and the percent of the population in each age category is the same. The distribution of income at any point in time will be
A) equal because all have the same profile. B) equal because incomes and wealth levels must then be the same. C) unequal because other sources of income will differ. D) unequal because incomes differ by age.
The production function shows the volume of output that can be produced from given inputs
a. True b. False Indicate whether the statement is true or false
There are two types of government expenditures
What will be an ideal response?