Why are long-run costs always less than or equal to short-run costs?
a. In the long run, technological change can occur, leading to lower costs over time. This means that long-run costs will always be less than or equal to short-run costs at the same level of output.
b. In the long run, employees are more productive so the firm's costs will be lower. This means that long-run costs will always be less than or equal to short-run costs at the same level of output.
c. In the long run, all inputs are flexible so the firm can minimize all costs. This means that long-run costs will always be less than or equal to short-run costs at the same level of output.
d. In the long run, firms can choose how much output to produce based on demand, which will lead to lower costs. This means that long-run costs will always be less than or equal to short-run costs at the same level of output.
Ans: c. In the long run, all inputs are flexible so the firm can minimize all costs. This means that long-run costs will always be less than or equal to short-run costs at the same level of output.
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When regulating a natural monopoly, average cost pricing is usually used rather than marginal cost pricing because
A) average cost pricing allows the firm to earn a normal rate of return on investment, while marginal cost pricing leads to economic losses. B) average cost pricing is more economically efficient than marginal cost pricing. C) average cost pricing leads to lower profits than marginal cost pricing. D) average cost pricing leads to a lower market price than marginal cost pricing.
Refer to the below data. If columns 1 and 3 are this firm's demand schedule, maximum economic profit will be:
Answer the question on the basis of the following demand and cost data for a specific firm.
A. $60
B. $70
C. $80
D. $90