Short run economic costs must be lower than long run economic costs because long run economic costs include the cost of inputs that are fixed in the short run (and thus are not part of short run cost).
Answer the following statement true (T) or false (F)
False
Rationale: Most of the statement is true -- except for the first part. It is true that the expense on capital is not a cost in the short run. But suppose that capital was fixed at a relatively low level in the short run, and suppose that we considered the cost of producing a high level of output. It may be that the cost associated with all the labor that is needed (given the low level of capital) is higher than the long run cost of both labor and capital when capital can be adjusted to its optimal level (given the high level of output).
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Real Gross Domestic Product is
A) the amount of people unemployed divided by the total labor force. B) the productivity of labor. C) the most that can be produced when the economy's resources are fully employed. D) the value of total production linked back to the prices of a single year.
Dole Co operates in a monopolistically competitive market. To try to earn an economic profit, Dole Co will
A) prevent other firms from entering the market. B) increase its product's price. C) continually seek to differentiate its product. D) increase output.