The firm's short-run costs contain
A) only variable costs.
B) only fixed costs.
C) both variable and fixed costs.
D) only opportunity costs.

Question

Quizplus · Accepted Answer

In the short run, a firm may have both variable costs (e.g. labor, materials) and fixed costs (e.g. rent, equipment). Therefore, choice C is the best answer. Option A, only variable costs, is incorrect as fixed costs may exist in the short run. Option B, only fixed costs, is incorrect as variable costs may be involved in the short run. Option D, only opportunity costs, is incorrect as it does not reflect the actual costs a firm incurs in the short run.

The Firm's Short-Run Costs Contain