One Assumption That Distinguishes Short-Run Cost Analysis from Long-Run Cost

question 594

Multiple Choice

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,

• A)output is not variable.
• B)the number of workers used to produce the firm's product is fixed.
• C)the size of the factory is fixed.
• D)there are no fixed costs.

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Definitions:

Contracts

Legal agreements between two or more parties that outline the terms and conditions under which certain actions or exchanges will take place.

Commodity Futures Pricing

The process of determining the price at which commodity futures contracts are traded in the market.

Spot Prices

The current price in the marketplace at which a given asset, such as securities, commodities, or currencies, can be bought or sold for immediate delivery.

Cost of Carry

The cost associated with holding a financial position, including storage costs for commodities or interest costs for financial securities.