Question

Which best characterizes the short run cost structure of railroads?

a) High fixed costs
b) Low variable costs
c) Flexible pricing
d) Rapid adjustments

Answer 1

The short-run cost structure of railroads is characterized by high fixed costs and low variable costs.

Step-by-step explanation:

The short-run cost structure of railroads is best characterized by high fixed costs and low variable costs. Fixed costs refer to costs that do not change regardless of the level of output, such as the cost of infrastructure, equipment, and maintenance. Railroads have high fixed costs because they require extensive track networks and maintenance facilities. On the other hand, variable costs, such as labor and fuel costs, are relatively low in the short run as they depend on the level of train operations.