All of the following statements except one are correct.Which is the exception?
A)Firms always operate in the short run.
B)The law of diminishing returns applies in both the short run and the long run.
C)All inputs are variable in the long run.
D)As output increases,long run average cost could decline,remain constant or increase.
E)The long run can be described as a planning horizon.

Question

Quizplus · Accepted Answer

The law of diminishing returns primarily applies in the short run when at least one input is fixed. In the long run, where all inputs are variable, the concept of diminishing returns is not directly applicable because firms can adjust all inputs to avoid diminishing returns.

All of the Following Statements Except One Are Correct