Explain why the long-run total cost curve, not the short-run total cost curve, shows the lowest cost of producing any level of output. Is there an exception?
What will be an ideal response?
In the long run, all costs are variable so the firm can select the least-cost mix of all inputs to produce any given quantity. The exception would be at minimum long-run cost where min. LR and min. SR costs are equal.
You might also like to view...
Which of the following statements can used to describe efficiency?
I. Efficiently using resources means that producers make the highest profits possible. II. Using resources efficiently means that we cannot produce more of one good without producing less of another good that has a higher value. III. Resource use is efficient when we produce goods and services that people value most highly. A) I only B) I and II C) II and III D) I, II and III
An incentive compensation scheme includes
a. a performance evaluation system b. a disciplinary action committee c. a reward system linked to performance d. Both A&C
In order to use inflation targeting, a central bank must:
a. be independent of fiscal policy. b. be dependent on fiscal policy. c. focus on money supply. d. focus on unemployment. e. focus on stable exchange rates.
The size of the effect of a given deposit of cash into a demand deposit account on the money supply is smaller:
a. the greater the fraction of money people want to hold as currency and the greater the fraction of deposits banks want to hold as excess reserves. b. the greater the fraction of money people want to hold as currency and the smaller the fraction of deposits banks want to hold as excess reserves. c. the smaller the fraction of money people want to hold as currency and the greater the fraction of deposits banks want to hold as excess reserves. d. the smaller the fraction of money people want to hold as currency and the smaller the fraction of deposits banks want to hold as excess reserves.