At Every Output Level, a Firm's Short-Run Average Cost (SAC)

question 98

Multiple Choice

At every output level, a firm's short-run average cost (SAC) equals or exceeds its long-run average cost (LAC) because:

• A) diminishing returns apply in the short run.
• B) returns to scale only exist in the long run.
• C) opportunity costs are taken into account in the short run.
• D) there are at least as many possibilities for substitution between factors of production in the long run as in the short run.
• E) none of the above

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Definitions:

Performance Ratings

Evaluations of an individual's or entity's achievements or output against predefined standards or objectives.

Standard Setting

The process of establishing benchmarks, norms, or levels of quality that products, services, or competencies should meet or exceed.

Work Sampling

A statistical technique used to estimate the proportion of time spent by workers on various activities, through random observations over a period.

Unavoidable Delays

Delays in a project or process that cannot be prevented, often caused by external factors like weather conditions, natural disasters, or changes in legislation.