The Classical Model Makes Little Distinction Between the Long Run

question 293

Multiple Choice

The classical model makes little distinction between the long run and short run because

• A) the model has not been fully developed yet.
• B) the classical economists knew that we are always operating in the short run.
• C) current changes influence the long run, so it is not possible to plan for the future.
• D) wages and prices adjust so fast that the economy is quickly moving towards the long run.

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Definitions:

Utility-Maximizing

A principle in economics whereby individuals seek to optimize their satisfaction or happiness through the consumption of goods and services.

Total Product Curve

A graphical representation showing how the quantity of output depends on the quantity of a variable input, holding all other inputs fixed.

Average Product

Calculating the efficiency of input by dividing the entire production by the volume of input.

Average Total Cost

The total cost of production divided by the quantity produced, also known as cost per unit.