In the short run,
A) all production costs must be fixed.
B) all production resources can be varied in quantity.
C) only variable costs determine how much to produce.
D) there are both variable and fixed costs of production.
E) a firm cannot experience diminishing returns.

Question

Quizplus · Accepted Answer

In the short run, there are both variable and fixed costs of production. Variable costs can be altered by the firm in the short run, while fixed costs are non-negotiable. Therefore, a firm can experience diminishing returns due to the fixed nature of some of its costs. Choices A, B, and C are all incorrect as they do not accurately describe the nature of costs in the short run.

In the Short Run