Figure 7.4.1 -Refer to Figure 7.4.1 above. An increase in production, from q₁ to q₂: A) is more costly in the short run than in the long run. B) uses more capital in the short run. C) uses less inputs in the long run. D) costs the same in the short run or in the long run.

Question

Quizplus · Accepted Answer

In the short run, firms have fixed inputs, such as capital, and can only adjust variable inputs, like labor, to increase production. This leads to diminishing returns and higher costs per additional unit of output. In the long run, all inputs can be adjusted, allowing firms to achieve more efficient production levels at potentially lower costs per unit.

Figure 7.4.1 -Refer to Figure 7.4.1 Above. an Increase in Production, from Production