20. To economists, the main difference betwoen the shont run and the long rum is
ID: 1123822 • Letter: 2
Question
20. To economists, the main difference betwoen the shont run and the long rum is thst A the law of diminishing retums applies in the long nun, but not in the short un B in the long run all resources are variable, while in he short run a least one resource is fasd C. fxed costs are more important to decision making in the long run than they are in the short nun D. in the short run all resources are fund, while in the long run all resources are variable. 21. The law of diminishing returns indicates that A as extra units of a variable resource are added to a fixed resouroe, marginal product will docine beyond some point a because of economies and diseconomies of scale a competitive firm's long-nun average totel cost ourw will be U-shaped C. the demand for goods produced by purely competitive industries is downsloping D. beyond some point the extra utlity derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction. 22. Fixed cost is A the cost of producing one more unit of capital, say, machinery B. any cost which does not change when the firm changes its output C. average cost multiplied by the firm's output D. usually zero in the short run. 23. Which of the following is most likely to be a fixed cost? A. shipping charges B. property insurance premiums C. wages for unskilled labor D. expenditures for raw materials 24. Which of the folowing is most likely to be a variable cost? A. fuel and power payments B. interest on business loans C. rental payments on IBM equipment D. real estate taxes 25. Marginal cost is the: A. rate of change in total fixed cost that results from producing one more unit of output B change in total cost that results from producing one more unit of cutput C. change in average variable cost that results from producing one more unit of output. D. change in average total cost that results from producing one more unit of output. 26. Assume that in the short run a firm is producing 100 units of output, has average total costs of $200 and average variable costs of $150. The firm's total fixed costs are: A. $5,000. B. $500 C $.50. D. $50Explanation / Answer
20) Option B) is correct because in the long run all inputs are fixed while in the short run we assume labor to be variable factor.
21) Option a) is correct because law of diminishing marginal returns tell as variable input increases keeping other input fixed marginal product decreases.
22) Option b)is correct because it is not affected by quantity of output produced
23) Option b) because it is not related to output being produced.
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