Which of the Following Statements Best Explains Why Long-Run Average

question 79

Multiple Choice

Which of the following statements best explains why long-run average cost is never greater than short-run average cost?

• A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run.
• B) In the long run, diseconomies of scale might not occur, but in the short run diminishing marginal returns do.
• C) In the long run, the cost of capital declines because the firm is able to pay down some of its debts.
• D) In the long run, the average cost curve need not be U-shaped, but in the short run it is.

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Definitions:

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