Author Question: Identify the difference between the short-run and the long-run.[br][br][b][color=#7BCCB5]Question ... (Read 78 times)

asan beg

  • Hero Member
  • *****
  • Posts: 570
Identify the difference between the short-run and the long-run.

Question 2

A perfectly competitive firm produces 50 units of output, at equilibrium, in the short run. The total cost borne by the firm is 300 and the average revenue is 2 . Therefore, the firm:
 a. is just breaking even.
  b. is earning positive profits.
  c. is facing a positively sloped demand curve.
  d. is suffering losses.
  e. is experiencing diseconomies of scale.



momtoalll

  • Sr. Member
  • ****
  • Posts: 326
Answer to Question 1

The short run is defined as the length of time during which the decision maker can vary some inputs, although others remain fixed. In the long run all inputs are variable. Inputs are still substitutable in the short run: the firm can change its output level by changing only those inputs that are variable. Long-run substitution is more obvious: the firm can produce a given rate of output using labor intensive methods that use a high ratio of worker time to capital (machinery) services, or it can use the opposite mix, a capital intensive one.

Answer to Question 2

d



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

Normal urine is sterile. It contains fluids, salts, and waste products. It is free of bacteria, viruses, and fungi.

Did you know?

Certain chemicals, after ingestion, can be converted by the body into cyanide. Most of these chemicals have been removed from the market, but some old nail polish remover, solvents, and plastics manufacturing solutions can contain these substances.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

There are more nerve cells in one human brain than there are stars in the Milky Way.

Did you know?

Multiple experimental evidences have confirmed that at the molecular level, cancer is caused by lesions in cellular DNA.

For a complete list of videos, visit our video library