Question

1.

The long run is a period that is:

	A.	long enough to vary the quantities of all factors of production.
	B.	long enough to vary all factors of production except for the amount of capital available.
	C.	at least one year.
	D.	more than one month.

2.  

In the long run:

	A.	the firm has time to change the level of all inputs.
	B.	all inputs are more expensive.
	C.	inputs are neither variable nor fixed.
	D.	at least one input is free.

3.

A factor of production whose quantity cannot be changed during the short run is:

	A.	an incremental factor of production.
	B.	a fixed factor of production.
	C.	a marginal factor of production.
	D.	a variable factor of production.

4.

In making an “either–or” decision

	A.	continue in an activity as long as the marginal cost is greater than the marginal benefit.
	B.	continue in an activity as long as the marginal cost is less than the marginal benefit.
	C.	choose the activity that results in the greater accounting profit.
	D.	choose the activity that results in the greater economic profit.

Answer 1

1) long enough to vary the quantities of all factors of production

option(A)

2) the firm has time to change the level of all inputs

option(A)

3) a fixed factor of production

option(B)

4) choose the activity that results in the greater economic profit

option(D)