Variable cost ______________ while fixed cost ______________ as output ______________ in the short run.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.arises; falls; decreasesbrises; stays the same; decreasescrises; stays the same; increasesdfalls; falls; decreases
Question
Variable cost ______________ while fixed cost ______________ as output ______________ in the short run.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.arises; falls; decreasesbrises; stays the same; decreasescrises; stays the same; increasesdfalls; falls; decreases
Solution
The correct answer is c: Variable cost rises; fixed cost stays the same; output increases in the short run.
Here's why:
-
Variable costs are costs that change in proportion to the good or service that a business produces. So, as output increases, variable costs will also increase.
-
Fixed costs, on the other hand, are costs that do not change with the level of output. These are costs that a business has to pay regardless of how much they are producing. So, even as output increases, fixed costs will stay the same in the short run.
Similar Questions
In the short run, an increase in the price of one of the fixed inputs will cause average cost to ______________ and marginal cost to ______________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aincrease; decreasebnot change; not changecincrease; increaseYour answerddecrease; decreaseeincrease; not change
Assume that competitive firms in a competitive market are in long-run equilibrium. Assume a constant cost industry. In the short-run, an increase in demand will cause firm output to ______________ and the market price to ______________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aincrease; increasebremain the same; increasecremain the same; remain the samedincrease; remain the same
Suppose a commodity is sold in perfectly competitive markets. If the market price of the commodity falls, each individual firm will produce ________ output and will experience ________ profits.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.ahigher; higherbhigher; lowerclower; higherdlower; lower
If a firm increases its output level in the short run, thenSelected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.avariable costs rise, but fixed costs remain unchangedbboth variable costs and fixed costs risecvariable costs rise, but fixed costs falldvariable costs remain unchanged, but fixed costs rise
Suppose that there are external benefits in an otherwise perfectly competitive market. The market will produce ______________ the allocatively efficient level of output.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.amore thanbless thancan amount equal todeither an amount equal to or an amount more than
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.