Question

In the long run, all fixed costs become variable (true or false)
A) True
B) False

Answer 1

In the long run, all fixed costs become variable costs as firms have the flexibility to choose and adjust their production technology.

Step-by-step explanation:

In the long run, all fixed costs become variable costs. This means that as firms have more flexibility in choosing their production technology, they can adjust their fixed costs over time. The ability to change fixed costs allows firms to adapt to changing market conditions and optimize their production processes.

For example, if a firm initially has a high fixed cost for a specific production technology, but later finds a more cost-effective technology, it can switch to the new technology and reduce its fixed costs. In this way, fixed costs become variable costs that can be adjusted by the firm.

Overall, the statement that in the long run all fixed costs become variable costs is true as firms have the ability to choose and adjust their production technology.