Production and Costs in the Long Run 7.4-1 ~ Benjamin Rainwater

Question 1

The long run is

Answer 1

a time period in which there are no fixed inputs and therefore no fixed
costs.

Question 2

A capital-intensive technology is

Answer 2

one that uses more capital relative to labor.

Question 3

A labor-intensive technology is

Answer 3

one that uses more labor relative to capital.

Question 4

In the short run, almost all the

manufacturing inputs are…

Answer 4

fixed

Question 5

The only variable input is…

Answer 5

labor

Question 6

In the long run, the firm has enough time to

vary all inputs including

Answer 6

factory, equipment,

machinery, tools, and such.

Question 7

In the long run, there are no fixed inputs. True or False?

Answer 7

True

Question 8

In the long run, the firm also gets to choose

the size of its operation. This is called the

Answer 8

scale

Question 9

In the short run, is scale fixed?

Answer 9

yes

Question 10

In the long run, the firm can choose either a
capital-intensive technology or a labor intensive
technology. The choice depends
on what?

Answer 10

relative costs

Question 11

In the short run, the firm can only add or

eliminate…

Answer 11

labor

Question 12

In the long run, a firm faces two decisions: What are those?

Answer 12

(1) the cost-minimizing technique that it wants

to use and (2) the scale or size of operation that it will use.