The Basic Difference Between the Short Run and the Long

question 28

Multiple Choice

The basic difference between the short run and the long run is that

• A)all costs are fixed in the short run, but all costs are variable in the long run.
• B)the law of diminishing returns applies in the long run but not in the short run.
• C)at least one resource is fixed in the short run, while all resources are variable in the long run.
• D)economies of scale may be present in the short run but not in the long run.

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Definitions:

Differentiation Value

The unique attributes or benefits that make a product or service stand out from competitors, enhancing its market appeal.

Useful Life

The estimated period over which a fixed asset is expected to be usable by the organization, impacting its depreciation calculation.

Operating Costs

The ongoing expenses related to running a business, excluding the cost of goods sold, such as rent, utilities, and payroll.

Service Hours

The total hours spent by an organization or employee providing services to clients or working on service-related tasks.