Figure 7-13
-AC is lower in the long run than in the short run because
A)prices often fall, allowing savings on purchases.
B)inputs can be combined more efficiently in the long run.
C)over time the prices of all inputs tend to decrease.
D)AFC falls with output over all ranges of output.

Question

Figure 7-13 
-AC is lower in the long run than in the short run because
A)prices often fall, allowing savings on purchases. 
B)inputs can be combined more efficiently in the long run. 
C)over time the prices of all inputs tend to decrease. 
D)AFC falls with output over all ranges of output.

Quizplus · Accepted Answer

In the long run, firms have more flexibility to adjust their inputs and methods of production, which allows for more efficient combinations of inputs and lower production costs, leading to a lower average cost (AC) in the long run compared to the short run. Choice A is not a consistent trend and will not always hold true. Choice C is also not guaranteed, as the prices of inputs can fluctuate over time. Choice D refers to AFC, which is not the same as AC, so it is not relevant to the question.

Figure 7-13 -AC Is Lower in the Long Run Than in the Than