Which of the following is true of the long run?
A) The average fixed cost is higher in the long run than in the short run.
B) All inputs costs are variable in the long run.
C) The firm produces at a higher cost in the long run than in the short run.
D) All inputs to production are kept fixed in the long run.
E) Answers the average fixed cost is higher in the long run than in the short run and all inputs costs are variable in the long run are both correct.

Question

Quizplus · Accepted Answer

In the long run, all inputs costs are variable, meaning that the firm has the flexibility to adjust its production levels and the use of inputs. This leads to a more efficient production process and potentially lower costs compared to the short run. The other options are incorrect as average fixed cost may or may not be higher in the long run, the firm may or may not produce at a higher cost in the long run depending on its efficiency, and all inputs are not kept fixed in the long run. Therefore, the correct answer is B.

Which of the Following Is True of the Long Run