If a firm's marginal cost curve is very steep in the short- term, but much flatter in the long- term, all else equal a -_______ term forecast is likely to be more valuable than a _______ term forecast.

Question

Quizplus · Accepted Answer

A flatter marginal cost curve in the long-term suggests that costs increase more slowly as output increases, making long-term forecasts more valuable because they can better predict the firm's cost behavior and profitability over time. In contrast, a steep marginal cost curve in the short-term indicates rapid cost increases with output, making short-term forecasts less valuable due to the higher uncertainty and variability in costs.

If a Firm's Marginal Cost Curve Is Very Steep in the Short-