ECONOMICS
PROFIT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
In the long run the firm can be released from its fixed costs (e.g. by no longer renting a factory) and it will shut down.
|
|
Yes, I understand this from the notes
|
|
|
No, I don’t understand this from the notes
|
|
|
No, I don’t understand this, as I have not read the notes
|
|
|
None of the above
|
Explanation:
Detailed explanation-1: -No, because all costs are variable costs in the long run and no factor is a fixed factor in the long run.
Detailed explanation-2: -No costs are fixed in the long run. A firm can build new factories and purchase new machinery, or it can close existing facilities. In planning for the long run, a firm can compare alternative production technologies or processes.
Detailed explanation-3: -The only way that a firm can eliminate its fixed costs is by shutting down. Shutting down doesn’t necessarily mean going out of business. By reducing the output of a factory to zero, the company could eliminate the costs of raw materials and much of the labor.
There is 1 question to complete.