Price Elasticity of Demand
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Questions and Answers

Which factors of production are adjustable in the long run?

  • Only variable factors
  • Only fixed factors
  • Both fixed and variable factors (correct)
  • Neither fixed nor variable factors

What do long-run costs represent?

  • Costs incurred when only fixed inputs are adjusted
  • Costs incurred when all inputs are adjusted to reach a desired level of output (correct)
  • Costs incurred when only variable inputs are adjusted
  • Costs incurred when no inputs are adjusted

What do long-run average costs (LRAC) indicate?

  • The highest cost per unit of output achievable
  • The average cost per unit of output achievable when all inputs can be adjusted
  • The average cost per unit of output achievable when all inputs are fixed
  • The lowest cost per unit of output achievable when all inputs can be adjusted (correct)

What are economies of scale?

<p>When the average cost of producing a good or service decreases as the quantity produced increases (A)</p> Signup and view all the answers

How can technological advancements affect production costs?

<p>They decrease production costs (B)</p> Signup and view all the answers

How can market competition impact production costs?

<p>It decreases production costs (C)</p> Signup and view all the answers

What do economies of scale result in?

<p>Lower production costs (B)</p> Signup and view all the answers

What do technological advancements lead to in terms of production costs?

<p>Lower production costs (D)</p> Signup and view all the answers

What is the relationship between market competition and production costs?

<p>Market competition decreases production costs (A)</p> Signup and view all the answers

What do long-run average costs (LRAC) indicate about production levels?

<p>The lowest cost per unit of production achievable when all inputs can be adjusted (B)</p> Signup and view all the answers

Which of the following is true about long-run costs?

<p>Long-run costs are incurred when all inputs are adjusted to reach a desired level of output. (D)</p> Signup and view all the answers

What do long-run average costs (LRAC) indicate?

<p>The lowest cost per unit of output achievable when all inputs can be adjusted. (D)</p> Signup and view all the answers

What is the relationship between production and costs in the long run?

<p>Long-run costs are incurred when all inputs are adjusted to reach a desired level of output. (B)</p> Signup and view all the answers

What can economies of scale result in?

<p>Decreased average cost of producing a good or service as the quantity produced increases. (C)</p> Signup and view all the answers

How can technological advancements affect production costs?

<p>Technological advancements can lead to lower production costs by increasing productivity or reducing the need for labor. (D)</p> Signup and view all the answers

What impact can market competition have on production costs?

<p>Market competition can drive down production costs by forcing firms to be more efficient and innovative. (C)</p> Signup and view all the answers

What do economies of scale occur as?

<p>The average cost of producing a good or service decreases as the quantity produced increases. (D)</p> Signup and view all the answers

What do technological advancements lead to in terms of production costs?

<p>Technological advancements can lead to lower production costs by increasing productivity or reducing the need for labor. (A)</p> Signup and view all the answers

What is the impact of market competition on production costs?

<p>Market competition can drive down production costs by forcing firms to be more efficient and innovative. (A)</p> Signup and view all the answers

What do long-run average costs (LRAC) indicate about production levels?

<p>The efficiency of any given production level within the long-run production possibilities curve. (C)</p> Signup and view all the answers

Which of the following is true about long-run costs?

<p>Long-run costs are incurred when all inputs are adjusted to reach a desired level of output. (D)</p> Signup and view all the answers

What do long-run average costs (LRAC) indicate about production levels?

<p>The efficiency of any given production level within the long-run production possibilities curve. (A)</p> Signup and view all the answers

What impact can market competition have on production costs?

<p>Market competition can drive down production costs by forcing firms to be more efficient and innovative. (A)</p> Signup and view all the answers

What do economies of scale occur as?

<p>The average cost of producing a good or service decreases as the quantity produced increases. (C)</p> Signup and view all the answers

What do technological advancements lead to in terms of production costs?

<p>Technological advancements can lead to lower production costs by increasing productivity or reducing the need for labor. (C)</p> Signup and view all the answers

What can economies of scale result in?

<p>Lower production costs and increased efficiency. (A)</p> Signup and view all the answers

Which factors of production are adjustable in the long run?

<p>All factors of production. (B)</p> Signup and view all the answers

What is the relationship between production and costs in the long run?

<p>Long-run costs are incurred when all inputs are adjusted to reach a desired level of output. (A)</p> Signup and view all the answers

What do long-run average costs (LRAC) indicate?

<p>The lowest cost per unit of output achievable when all inputs can be adjusted. (A)</p> Signup and view all the answers

What is the impact of market competition on production costs?

<p>Market competition can drive down production costs by forcing firms to be more efficient and innovative. (A)</p> Signup and view all the answers

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