Author Question: Although capital is a variable factor in the long run, once chosen, it often becomes a fixed factor ... (Read 46 times)

xman15. · **on:** Oct 12, 2022

Question 1

A very-long-run consideration that could change a firm's production function is
◦ diminishing returns.
◦ an improvement in education that increases the quality of the economy's labour force.
◦ increasing returns to scale of operation.
◦ size of the plant.
◦ rising cost of the factors of production.

Question 2

Although capital is a variable factor in the long run, once chosen, it often becomes a fixed factor for a long time. A profit-maximizing firm must therefore select a method of production that is
◦ economically efficient at current factor prices and sufficiently flexible to adapt to changing factor prices over time.
◦ economically efficient at current factor prices.
◦ technologically advanced beyond methods currently used.
◦ adaptable to wide ranges of output over time.
◦ labour intensive, as labour is always a variable factor.

feiojef · **Reply #1 on:** Oct 12, 2022

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