The basic difference between the short run and the long run is that

14. The basic difference between the short run and the long run is that:
A. The law of diminishing returns applies in the long run but not in the short run
B. All costs are fixed in the short run but all costs are variable in the long run
C. At least one resource is fixed in the short run while all resources are variable in the long run
D. Economies of scale may be present in the short run but not in the long run

15.At what point does marginal product equal average product?
A.Where average product is equal to its minimum value
B.where average product is equal to its maximum value
C.where marginal product is equal to its minimum value
D. Where marginal product is equal to its maximum value

22. In a decreasing cost industry:
A. Greater demand leads to higher long run equilibrium prices
B. Lower demand leads to higher long run equilibrium prices
C. The law of demand does not apply
D. There will be no firm entry because the increased supply will reduce the long run equilibrium price

24. Marginal cost is the:
A. Change in total cost that results from producing one more unit of output
B. Change in average total cost that result from producing one more unit of output
C. Change in average variable cost that results from producing one more unit of output
D. Rate of change in total fixed cost that results from producing one more unit of output

26. Marginal product is:
a. The increase in total revenue attributable to the employment of one more worker
B. The increase in total cost attributable to the employment of one more worker
C. Total product divided by the number of workers employed
D. The increase in total output attributable to the employment of one more worker


Answer

1) The basic difference between the short run and the long run is that: Solution: C. At least one resource is fixed in the short run while all resources are variable in the long run Explanation: The short run is characterized by at least one fixed resource; and the long run is characterized by economists as the ability of the firm to change its plant size 2) At what point does marginal product equal average product? Solution: C.where marginal product is equal to its minimum value Explanation: If labor’s marginal product equals its average product then in that case the average product will reach its minimum value at that point, as it occurred in the first-order condition for a minimum. 3) In a decreasing cost industry: Solution: B. Lower demand leads to higher long run equilibrium prices Explanation: Decreasing cost industry is an industry in which the expansion of industry output by the entry of new firms reduces the individual firm’s cost curves as a result the cost curve shifts downward 4) Marginal cost is the: Solution: A. Change in total cost that results from producing one more unit of output

Explanation: Marginal cost is an extra cost incurred in the production of one more unit of a good or service

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