Businesses have two types of cost: fixed and variable.
Answer the following statement true (T) or false (F)
True
We can think of businesses as having two types of costs: variable (short-term) costs and fixed (long-term) costs.
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If supply decreases along a given demand curve,
a. an excess quantity demanded will be created, increasing the equilibrium price and causing equilibrium quantity to fall b. an excess quantity supplied will be created, lowering the equilibrium price and causing equilibrium quantity to rise c. an excess quantity demanded will be created, raising the equilibrium price and quantity d. an excess quantity supplied will be created, lowering the equilibrium price and quantity e. price will fall, shifting the demand curve outward, raising the equilibrium quantity
If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should
a. reduce the labor used and increase the machinery used if labor costs half as much as machinery. b. reduce the labor used and increase the machinery used if labor and machinery cost the same amount. c. reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. d. reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.