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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