If a Firm's Marginal Cost Curve Is Very Steep in the Short-

question 12

Multiple Choice

If a firm's marginal cost curve is very steep in the short- term, but much flatter in the long- term, all else equal a -_______ term forecast is likely to be more valuable than a _______ term forecast.

• A)short; extended
• B)long; short
• C)long; extended
• D)short; long

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Definitions:

Long-Run Marginal Cost

The cost of producing one more unit of a product when all production factors are variable.

Pricing

The process of determining the value that will be charged for goods or services.

Production Lines

The arrangement or sequence of machinery and equipment in a factory where a product is assembled progressively through various stages of production.

Short-Run Marginal Cost

The increase in cost incurred from producing one additional unit of a good or service in the short term, when some inputs or resources are fixed.