What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?
What will be an ideal response?
The short run is the time period when at least one input cannot be changed and the long run is the time period when all inputs can be varied. There is no appropriate time dimension for the long run. It depends on the production processes used by firms.
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The interest rate represents the opportunity cost of holding non-monetary assets
a. True b. False Indicate whether the statement is true or false
Happy Bagels sells its bagels for $6 each and the firm has a constant marginal cost of $4 per bagel, which is equal to its (constant) average total cost. If Happy Bagels does not sell a bagel the day it is produced, the bagel is sold as day-old for $2. If Happy Bagels is currently holding 50 bagels in inventory and the probability that Happy Bagels will sell 50 bagels or more is 0.40, which of
the following statements is true? A) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to double its inventory. B) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to increase its inventory. C) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory. D) Happy Bagels is holding the profit-maximizing, optimal level of inventory.