A Basic Distinction Between the Long Run and the Short

question 274

Multiple Choice

A basic distinction between the long run and the short run is that

• A) if a firm produces no output in the long run, it still incurs a cost.
• B) the opportunity costs of production are lower in the short run than in the long run.
• C) in the long run, some inputs are fixed, while in the short run, all inputs are variable.
• D) in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted.

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Definitions:

Manufacturing Process

A series of steps involving the conversion of raw materials into finished products through various production operations.

Process Costing System

An accounting methodology that accumulates and assigns costs to large volumes of identical or similar units of output.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product.

Journal Entry

A record in the accounting ledger that represents a single transaction and its effect on accounts.