In the long run ?
Correct answer: B. there are no fixed factors of production
- A. all firms must make economic profits.
- B. there are no fixed factors of production
- C. a firm can vary all inputs, but it cannot change the mix of inputs it uses.
- D. a firm can shut down, but it cannot exit the industry
Explanation
In the long run, no input is fixed, so the firm can adjust all factors of production and its scale of operation. Economic profits are not guaranteed, because entry and exit tend to eliminate them in competitive industries.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
If the ABC Typing Service is earning a rate of return greater than the return necessary for the business to continue operations, then ?
The normal rate of profit for relatively risk-free firms will be _________ the interest rate on risk-free government bonds?
In a monopoly, marginal revenue is ?
The short run, as economists use the phrase, is characterized by ?
Relative to a competitively organized industry a monopoly ?
When ________ substitutes exist, a monopolist has ________ power to raise price?