Question 1

If the firm can vary all factors of production, it is operating
A) at a profit.
B) at a zero economic profit.
C) in the short run.
D) in the long run.

Accepted Answer

If the firm can vary all factors of production, it is operating in the long run. This means that it has the flexibility to adjust all inputs and make changes to its production processes, including expanding or decreasing its scale of operations. In the long run, the firm can achieve a state where it earns zero economic profit, taking into account all costs, including opportunity costs.

Question 2

For a wheat farmer in the middle of harvesting system, a fixed input would be
A) workers hired.
B) combines rented.
C) the land that had been planted.
D) trucks rented to haul the wheat.

Accepted Answer

The land that had been planted is a fixed input because it cannot be changed during the harvesting process. The farmer cannot add or remove land at this point. The other options are variable inputs because the farmer can adjust the number of workers, combines, and trucks used during the harvesting process.

Question 3

If a firm can vary all of its factors of production, it is operating in
A) the long run.
B) the immediate run.
C) equilibrium.
D) the short run.

Accepted Answer

In the long run, all factors of production are variable and can be adjusted to reach the most efficient levels. In the short run, at least one factor of production is fixed and cannot be adjusted. The immediate run is not a commonly used economic term, and equilibrium refers to a state of balance between supply and demand, rather than the ability to vary factors of production.

Question 4

If Dell, a computer company, is determining whether to build a new plant in Texas or in New Mexico, it is making a(n) ________ decision.
A) immediate-run
B) long-run
C) short-run
D) variable-input

Accepted Answer

Dell's decision to build a new plant involves long-run planning, which typically involves decisions that impact a company for a longer period of time, such as several years or more. Building a new plant is a significant investment that requires careful consideration of various factors, including location, infrastructure, availability of resources, labor costs, and government policies. Such decisions need to be made with a long-term perspective, which is why the correct option is B.

Question 5

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a ________ decision.
A) plant-size
B) long-run
C) short-run
D) fixed-input

Accepted Answer

Hiring waiters for a holiday weekend is a short-run decision as El Torito Restaurant is likely to adjust its staffing levels frequently based on changing demand conditions.

Question 6

The time frame in which all factors of production can vary is
A) the short run.
B) the intermediate run.
C) the long run.
D) indeterminate.

Accepted Answer

In the long run, all factors of production including labor, capital, and technology can vary. This allows firms to make adjustments to their production processes and achieve their desired level of output. In the short run, some factors of production, such as capital and technology, may be fixed, which limits a firm's ability to alter its level of production. The intermediate run is a less commonly used concept and typically refers to a time frame between the short run and the long run. Therefore, C) the long run is the best choice as it correctly identifies the time frame in which all factors of production can vary.

Question 7

The short run is
A) a period of time during which at least one input cannot be changed.
B) a period of time during which no inputs can be changed.
C) a period of time during which all inputs can be changed.
D) a period of time shorter than one year.

Accepted Answer

In the short run, at least one input (usually capital) is fixed and cannot be changed. This makes choice A the most accurate option.

Question 8

If a farmer buys one-hundred more acres for her flower farm, she is making a
A) long-run decision.
B) short-run decision.
C) immediate-run decision.
D) variable-input decision.

Accepted Answer

Buying more land for a flower farm is a long-run decision because it involves a significant investment and will require planning and management over a long period of time.

Question 9

The difference between the short run and the long run is
A) economic profits are negative in the short run and positive in the long run.
B) economic and accounting profits are not equal in the short run but are equal in the long run.
C) that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied.
D) the short run is a period less than a year while the long run is a period greater than a year.

Accepted Answer

The short run is characterized by the presence of fixed inputs or factors of production, while the long run is characterized by the ability to vary all inputs or factors of production. The other options are incorrect: A is not necessarily true, and B and D do not capture the fundamental difference between the short and long run.

Question 10

Ajax Corporation has recently finished building a new factory. They moved into the factory a month ago and found that it is the perfect size given the amount they want to produce. Ajax is now operating in the
A) production time.
B) corporation time.
C) long run.
D) short run.

Accepted Answer

Ajax is now operating in the long run because they have completed building a new factory, which is a long-term investment, and have found it to be the perfect size for their current production needs. In the long run, firms have more flexibility to adjust their inputs and make investments that can improve their efficiency and profitability.

Question 11

For a firm, we define the short run as a period of time during which
A) at least one input cannot be changed.
B) all inputs can be changed.
C) only the plant size can be changed.
D) all inputs cannot be changed.

Accepted Answer

In the short run, at least one input, typically the fixed input or the capital, cannot be changed. The variable input or labor can be changed in the short run to adjust to changes in output or demand, but the fixed input remains the same. Therefore, only choice A is correct.

Question 12

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

Accepted Answer

The answer of What is the difference between the short...

Question 13

In economics, the short run means a time period
A) during which new firms are prohibited from entering the industry.
B) during which firms are not allowed to change the amount of imported resources they use.
C) that is between one and five years.
D) during which the firm is unable to change its plant size.

Accepted Answer

The short run is a time period during which a firm is unable to change its plant size. This means that the firm is limited in its ability to expand or contract its operations. Other inputs, such as labor and materials, may be adjusted in the short run, but the firm's physical capital is fixed. The short run is contrasted with the long run, in which all inputs are flexible and the firm can adjust its operations as it sees fit.

Question 14

"In the short run, a firm cannot change any of its inputs." Do you agree or disagree? Explain.

Accepted Answer

The answer of "In the short run, a firm cannot...

Question 15

In the long run, a firm can change
A) nothing.
B) only one input, such as plant size.
C) all inputs.
D) None of the above are correct.

Accepted Answer

In the long run, a firm can change all inputs, including plant size, labor, and technology. This allows the firm to adjust to changes in market conditions and optimize its production process, making it more efficient and competitive. Therefore, the best choice is C.

Question 16

The best way to think of the short run and the long run is as
A) specific periods of time, although the time periods may differ across industries.
B) planning terms that apply to managers.
C) concepts that apply to all people who work for a firm.
D) a concept that only accountants are concerned with.

Accepted Answer

The short run and the long run are specific periods of time, although the time periods may differ across industries. In economics, the short run typically refers to a period of time in which at least one factor of production is fixed, while the long run is a period of time in which all factors of production are variable. This distinction is important in analyzing production, costs, and pricing decisions.

Question 17

Which of the following statements is NOT true about the short run and the long run?
A) The short run for a firm is today while the long run is next week.
B) These terms apply to the planning decisions of firms.
C) The firm is always operating in the short run.
D) In the short run, the firm can change the amount of variable inputs.

Accepted Answer

The short run and the long run are not specific time periods, but rather conceptual frameworks for analyzing a firm's decision-making. The short run is a period during which at least one input is fixed, while the long run is a period during which all inputs can be varied. Therefore, choice A is not true as the short run is not limited to just one day.

Question 18

The amount of calendar time associated with the long run
A) is less than five years.
B) is greater than one year.
C) is between one and five years.
D) varies by industry.

Accepted Answer

The long run in economics is a period during which all factors of production and costs are variable. The specific duration can vary significantly depending on the industry and the nature of the business.

Question 19

Which of the following is a long-run adjustment?
A) A restaurant hires a new chef.
B) A company relocate to a new headquarter in another city.
C) A bank hires a new CEO.
D) A company hires ten new management trainees.

Accepted Answer

Long-run adjustment refers to the changes made to the production process or input mix, such as changes in the location of the business. Moving to a new headquarter in another city is a long-term adjustment as it affects the production process, while hiring a new chef, CEO, or management trainees may be considered a short-term adjustment.

Question 20

When El Torito Restaurant is deciding to open a new restaurant location in another town, it is making a ________ decision.
A) labor
B) long-run
C) short-run
D) fixed-input

Accepted Answer

Opening a new restaurant location involves long-term planning and investment decisions such as leasing or buying a property, hiring and training staff, purchasing equipment and supplies, and developing marketing strategies. These decisions fall under the category of long-run decisions, as they cannot be easily reversed in the short term.

Quiz 22: The Firm: Cost and Output Determination

If the firm can vary all factors of production, it is operating

For a wheat farmer in the middle of harvesting system, a fixed input would be

If a firm can vary all of its factors of production, it is operating in

If Dell, a computer company, is determining whether to build a new plant in Texas or in New Mexico, it is making a(n) ________ decision.

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a ________ decision.

The time frame in which all factors of production can vary is

The short run is

If a farmer buys one-hundred more acres for her flower farm, she is making a

The difference between the short run and the long run is

Ajax Corporation has recently finished building a new factory. They moved into the factory a month ago and found that it is the perfect size given the amount they want to produce. Ajax is now operating in the

For a firm, we define the short run as a period of time during which

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

In economics, the short run means a time period

"In the short run, a firm cannot change any of its inputs." Do you agree or disagree? Explain.

In the long run, a firm can change

The best way to think of the short run and the long run is as

Which of the following statements is NOT true about the short run and the long run?

The amount of calendar time associated with the long run

Which of the following is a long-run adjustment?

When El Torito Restaurant is deciding to open a new restaurant location in another town, it is making a ________ decision.