A firm's long- run cost is the cost of production when the firm
A) uses the economically efficient quantities of all of its factors of production.
B) can vary the amount of output it produces.
C) calculates its cost at least one year into the future.
D) adds together all of its short- run costs.

Question

Quizplus · Accepted Answer

A firm's long-run cost involves the period during which all factors of production can be varied, allowing the firm to achieve the most economically efficient production levels. This contrasts with the short-run, where at least one factor of production is fixed.

A Firm's Long- Run Cost Is the Cost of Production