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Economics
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A5. If factor prices decrease, (A) (B) both the long-run and short-run average cost curves will shift downward. here will be a downward shift in the long-run average cost curve but not in the short-run average cost curve. a firm will move down along its long-run average cost curve only. a firm will move down along both its long-run and short-run average cost curves. there will be no change in the cost curves in the long run. (D) (E)

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Related questions

If a technological change occurs in the economy,
a. the long-run aggregate supply curve will shift to the right.
b. the long-run aggregate supply curve will shift to the left.
c. we will move down along the long-run aggregate supply curve.
d. we will move up along the long-run aggregate supply curve.

10-When marginal cost is greater than average total cost,
A. Average total cost must be increasing with output
B. Average variable cost must be decreasing with output
C. Average fixed cost must be increasing with output
D. Marginal cost must be increasing with output

11-If a firm's demand curve falls below its AVC curve, then the firm should
A. Shut down now
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Shutdown in the long-run

12- The demand curve facing a perfectly competitive firm is
A. Upward sloping
B. Perfectly inelastic
C. Downward sloping
D. Perfectly elastic

13-If the demand curve falls below the ATC curve but lies above AVC, then the firm should
A. Should shut down
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Operate in the short run and the long run

14-At the output where MC = ATC = P, the perfectly competitive firm
A. Should shutdown
B. Has no economic profit
C. Is not profit maximizing
D. Should raise output

A student has just written on an exam that, in the long run, fixed cost will make the average total cost curve slope downward. Why will the professor mark it incorrect?

a) In the long run, there are no fixed costs, meaning the average total cost curve shifts down.

b) In the long run, fixed cost decreases as costs are spread out over a greater quantity of output. Declining fixed cost accounts for the downward-sloping average total cost curve.

c) In the long run, fixed costs increases as firms build new plants and purchase new capital. This means that the average total cost curve will eventually slope upward.

d) In the long run, firms have no fixed cost—all costs are variable. The shape of the long-run average total cost curve is determined by economies of scale.

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