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

Question

Quizplus · Accepted Answer

The fact that decisions are fixed in the short run but variable in the long run does have an impact on the firm's cost curves. In the short run, fixed costs are incurred regardless of the level of output, leading to a higher average cost per unit of output. In the long run, the firm can adjust its fixed costs and achieve a lower average cost per unit of output. This is reflected in the shape of the firm's cost curves, with the short-run average cost curve being U-shaped and the long-run average cost curve being downward-sloping.

The Fact That Many Decisions Are Fixed in the Short