Which of the following statements is (are) TRUE?
I. The firm's total cost is the sum of its fixed and variable costs.
II. Over the long term, the costs of the firm's inputs tend to become fixed.
III. In the long run, the firm can adjust the use of all of its inputs.
A) II
B) I
C) I and III
D) I, II, and III

Question

Quizplus · Accepted Answer

I is true because total cost indeed comprises both fixed costs (which do not change with the level of output) and variable costs (which do change with the level of output). III is true because in the long run, all input factors are variable, allowing firms to adjust all aspects of production in response to changes in the market or their operational strategy. II is incorrect because over the long term, the opposite tends to be true: costs become more variable as firms have more flexibility to adjust their inputs.

Which of the Following Statements Is (Are) TRUE