The cheapest way to produce a certain amount of output may vary between the short and long-run because:
A)all inputs can be adjusted in the long run.
B)all inputs can be adjusted in the short run.
C)input prices are fixed in the short run.
D)prices increase over the long-run.

Question

Quizplus · Accepted Answer

In the short run, some inputs may be fixed and cannot be adjusted, while in the long run, all inputs are variable and can be adjusted to achieve the lowest cost of production. Therefore, the cheapest way to produce a certain amount of output may vary between the short and long-run, making option A the correct choice. Option B is incorrect because there are some inputs that cannot be adjusted in the short run. Option C is incorrect because input prices may vary in both the short and long run. Option D is incorrect because there is no general assumption that prices increase over the long run.

The Cheapest Way to Produce a Certain Amount of Output