Short run economic costs must be lower than long run economic costs because long run economic costs include the cost of inputs that are fixed in the short run (and thus are not part of short run cost).

Question

Quizplus · Accepted Answer

In the short run, some costs are fixed and cannot be changed, leading to potentially inefficient production levels. In the long run, all costs are variable, allowing firms to adjust all inputs and potentially achieve lower average costs through economies of scale or more efficient production techniques.

Short Run Economic Costs Must Be Lower Than Long Run