Differentiate between the short run and the long run
The short run is a period of time during which some of the firm's cost commitments will not have ended. In the short run, firms have relatively little opportunity to change production processes so as to adopt the most efficient way of producing their current outputs, because plant sizes and other input quantities have largely been predetermined by past decisions.
The long run is a period of time long enough for all of the firm's current commitments to come to an end. Over the long run, all inputs, including plant size, become adjustable.
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Exhibit 30-5
?
A. underproduces; Q1 B. overproduces; Q2 C. overproduces; Q2 - Q1 D. underproduces; Q2 - Q1
Which of the following groups of people would be included in the official unemployment rate?
a. part-time workers b. workers temporarily laid off from jobs to which they expect to return c. discouraged workers d. all of the above
If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve?
The economy’s capacity to produce is defined in such a way that
a) output cannot exceed capacity b) the growth of potential GDP corresponds to the economy’s long run trend c) the economy is always operating at its current potential d) there is always a degree of slack or inefficiency in production, so output is always below capacity e) when workers work overtime, capacity expands