The long- run capacity decision depends on the ______period marginal revenue and the______ marginal cost.
A)off- peak; long- run
B)peak- ; short- run
C)peak- ; long- run
D)off- peak; short- run

Question

Quizplus · Accepted Answer

The long-run capacity decision is concerned with the planning of a company's production capacity over a longer period of time, typically several years. Therefore, the decision should be based on peak-period marginal revenue and long-run marginal cost. Peak-period marginal revenue reflects the highest price that can be charged for goods and services during periods of high demand, while long-run marginal cost takes into account all of the costs associated with adding or reducing production capacity over a longer period of time. Optimal capacity decisions are made when marginal revenue equals marginal cost.

The Long- Run Capacity Decision Depends on the ______Period Marginal