Consider the Following Statements When Answering This Question: I

question 134

Multiple Choice

Consider the following statements when answering this question: I. As Boeing's production fell 10% to 100 planes last year, learning by doing cannot account for this year's changes in long-run average costs.
II) Failure to take into account the effects of learning by doing will lead to overestimates of the cost-output elasticity.

• A) I is true, and II is false.
• B) I is false, and II is true.
• C) Both I and II are true.
• D) Both I and II are false.

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Definitions:

Short Run

A period in which at least one factor of production is fixed and cannot be changed.

Purely Competitive Industry

A market structure characterized by many small firms producing identical products, with no single firm able to influence market prices.

Long Run

A period of time in economics where all factors of production and costs can be varied, allowing for the adjustment of all inputs.