In the long run:
A. some inputs can be varied and no inputs are fixed.
B. all inputs can be varied and no inputs are fixed.
C. some inputs can be varied and some inputs are fixed.
D. no inputs can be varied and all inputs are fixed.
Answer: B
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Which of the following statements is the best example of the term ceteris paribus?
A) An economist holds other factors constant when he examines the relationship between tax rates and tax revenues. B) More money should be spent on cleaning up the environment. C) The government budget surplus was $200 billion in 2000 because the economy was growing. D) An increase in the budget surplus after an increase in tax rates implies that tax rate increases cause budget surpluses. E) When studying the effects of a budget deficit, an economist must take account of all the factors involved.
An externality
A) may be positive or negative. B) means a rapidly rising cost borne by consumers. C) is the cost of producing a good outside the United States. D) is the indirect cost, the overhead, of producing a product.