The fact that many decisions are fixed in the short run but variable in the long run has an impact on the firm's cost curves.

Question

Quizplus · Accepted Answer

In the short run, a firm's production capacity is fixed, so it cannot easily adjust its input levels. However, in the long run, all inputs can be adjusted, allowing the firm to change its production capacity. This difference in flexibility has an impact on the firm's cost curves, causing them to be steeper in the short run and flatter in the long run.

The Fact That Many Decisions Are Fixed in the Short