Which of the following represents the key difference between the short run and the long run?
a. In the long run, the firm makes commitments to a certain type of production technology which are represented as fixed costs in the long run. For example, they have signed a lease on a particular production facility. These fixed costs do not exist in the short run.
b. In the short run, the firm makes commitments to a certain type of production technology, which are represented as fixed costs in the short run. For example, they have signed a lease on a particular production facility. These fixed costs do not exist in the long run.
c. The short run refers to less than two years and the long run in over two years.
d. None of the above are correct.
b
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Acyclical variables:
a. Move in the same direction as the business cycle b. Only move in the same direction as the business cycle during recessions c. Only move in the same direction as the business cycle during expansions d. Move in the opposite direction as the business cycle e. None of the above.
The real-income effect is likely to be greater when
A) the substitution effect is not very large. B) the marginal utility of the last unit is high. C) the marginal utility per dollar spent on the last unit is high. D) the good is an expensive good.