Author Question: Which of the following represents the key difference between the short run and the long run? a. In ... (Read 13 times)

madam-professor · **on:** Jun 30, 2018

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.

Question 2

A recession is best defined as a period during which:
a. the percentage of the population employed increases.
b. employment, output, and income decrease.
c. the average price level in an economy decreases.
d. the usage of labor and capital resources increases.
e. budget deficit and trade deficit decrease.