When a factory is operating in the short run,
A)it cannot alter variable costs.
B)total cost and variable cost are usually the same.
C)average fixed cost rises as output increases.
D)it cannot adjust the quantity of fixed inputs.

Question

Quizplus · Accepted Answer

In the short run, a factory cannot adjust the quantity of fixed inputs, such as buildings and heavy machinery, because these are commitments that cannot be easily or quickly changed. Variable costs, on the other hand, can be adjusted in the short run, and average fixed cost actually decreases as output increases due to the spreading effect.

When a Factory Is Operating in the Short Run