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

Question

Quizplus · Accepted Answer

In the short run, a factory is unable to adjust the quantity of fixed inputs, therefore the answer is C. Option A is incorrect as in the short run, fixed costs are already incurred and cannot be altered. Option B is incorrect as average fixed cost decreases as output increases in short run due to spreading of fixed costs over a greater output. Option D is incorrect as variable costs are adjustable in the short run.

When a Factory Is Operating in the Short Run