Cost Activity Indexes Might Help Classify Costs as

question 24

Multiple Choice

Cost activity indexes might help classify costs as

• A) temporary.
• B) permanent.
• C) variable.
• D) transient.

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Definitions:

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full adjustment to changes.

Short Run

Period of time in which quantities of one or more production factors cannot be changed.

Long Run Equilibrium

Long run equilibrium occurs when all inputs can be adjusted by firms, markets are perfectly competitive, and economic profit is zero, leading to a situation where firms just cover their opportunity costs.

Monopolistically Competitive

A market structure characterized by many sellers offering differentiated products, leading to competition based on product quality, brand, and price.