The Long-Run Average Cost Curve Connects the Lower Part of the Short-Run

question 258

Multiple Choice

The long-run average cost curve connects the lower part of the short-run cost curves because ________.

• A) the prices of inputs are less when acquired for a longer time period
• B) firms have more flexibility to change input combinations in the long run
• C) the specialization of inputs increases productivity only in the long run
• D) firms earn positive profits in the long run

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Definitions:

Down Payment

A sum of money paid upfront, typically a percentage of the total price, as part of the purchase price of a high-value good, like real estate or a vehicle, to secure the transaction.

Specific Performance

A court-ordered mandate in a contract dispute requiring the party who breached the agreement to fulfill the terms as originally agreed upon.

Compensatory Damages

Monetary compensation awarded to a plaintiff to cover actual losses, such as injury or damages, resulting from the defendant’s actions.

Nominal Damages

A small sum awarded by a court when a legal wrong has occurred, but where there was no substantial loss or injury to be compensated.