In the Long Run, Because Firms Can Adjust Both Capital

question 84

Multiple Choice

In the long run, because firms can adjust both capital and labor:

• A) firms will grow.
• B) production is more expensive because firms must invest in both labor and capital.
• C) the impact of diminishing marginal returns is lessened.
• D) firms fire workers, replacing the labor productivity with capital.

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Definitions:

Modular Design

A design approach that divides a system into smaller parts called modules, which can be independently created, modified, replaced, or exchanged with other modules.