In the Long Run

question 237

Multiple Choice

In the long run

• A) a firm can shut down, but it cannot exit the industry.
• B) there are no fixed factors of production.
• C) a firm can vary all inputs, but it cannot change the mix of inputs it uses.
• D) all firms must make economic profits.

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Definitions:

Disposable Income

The monetary resources left for household spending and saving after the application of income taxes.

Dissaving

When consumption is greater than disposable income; negative saving.

APC

In economics, stands for Average Propensity to Consume, which is the fraction of income spent on consumption.

APS

The Average Propensity to Save, which is the fraction of total income that households save rather than spend on consumption.