How long is the long run?
What will be an ideal response?
In the long run, all inputs are variable. This is a different period of time for different firms. For electric power utilities, the long run is likely to be more than 10 years, given the long time it takes to build a generating plant. For a roadside seller of apples, the long run may be very short, as it takes little time to increase the size of the apple cart.
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The open economy effect and interest rate effect are two of the reasons why
A) higher price levels increase long-run aggregate supply. B) growth of the labor force does not contribute to economic growth in wealthy countries. C) capital formation does not contribute to economic growth in poor countries. D) the aggregate demand curve slopes downward.
A fiscal stimulus works to close a recessionary gap by shifting the
A) AD curve leftward. B) AS curve leftward. C) AD curve leftward and AS curve leftward. D) AD curve rightward. E) potential GDP line leftward.
Suppose a computer manufacturer purchases a $100 case from a supplier, a $300 computer chip from another supplier, and sells the computers for $1000 . How much did the company contribute to GDP?
a. $1000 b. $900 c. $700 d. $600 e. $400
In the long run, zero economic profit exists in monopolistic competition and perfect competition.
Answer the following statement true (T) or false (F)