Question 1

Which of the following best describes the economic short run?

Accepted Answer

A period during which at least one input is fixed.

Question 2

In the economic long run, which of the following statements is true?

Accepted Answer

All inputs can be varied.

Question 3

A firm has a long-term lease on a factory that is too costly to get out of. This is an example of:

Accepted Answer

A fixed input in the short run.

Question 4

Which of the following is the correct formula for total cost?

Accepted Answer

$$TC = FC + VC$$

Question 5

Variable costs are best defined as:

Accepted Answer

Costs that change as output changes.

Question 6

In the long run, which of the following is true about a firm's costs?

Accepted Answer

All costs are variable.

Question 7

Suppose a firm’s fixed cost is $$1000 and its variable cost is 500 $$when producing 100 units. What is the total cost?

Accepted Answer

$$TC = 1000 + 500 = 1500$$

Question 8

Which of the following is NOT a characteristic of the economic long run?

Accepted Answer

At least one input is fixed.

Question 9

A firm is considering whether to expand its factory. This decision is most relevant to which time period?

Accepted Answer

The economic long run.

Question 10

If a firm’s total cost increases as it produces more output, which type of cost is most likely responsible for this increase?

Accepted Answer

Variable cost.

Question 11

Which of the following best explains why the length of the long run varies from firm to firm?

Accepted Answer

Different firms have different technologies and input requirements.

Question 12

A bakery can hire more workers but cannot expand its building in the next six months. This scenario is an example of:

Accepted Answer

The economic short run.

Question 13

Which of the following is an example of a fixed cost for a manufacturing firm?

Accepted Answer

Monthly rent for the factory.

Question 14

If a firm can change all of its inputs, including the size of its plant, it is operating in:

Accepted Answer

The economic long run.

Question 15

Which cost remains unchanged as output increases in the short run?

Accepted Answer

Fixed cost.

Short Run and Long Run in Economics: Costs and Production

Study Guide - Practice Questions