Question

In the long run which of the following is true? The size of a firm's physical plant can be changed but the firm cannot adopt new technology. Total cost = fixed cost + variable cost. The firm can vary its explicit costs but not its implicit costs. There are no fixed costs.

Answer 1

There are no fixed costs.

Step-by-step explanation:

In economics, the definition of long run is the period of time where all costs are variable. Long run is not something specified, may people confuse it with long term (accounting term) which means more than a year, but the long can be many years from now. On the other hand, the short run is defined as the period of time where at least one of the costs are fixed and cannot be changed.

Short run is a more practical concept while long run is theoretical only, because at no point in time will all costs be variable, at least not with our current economic system. You will always have wages to pay, utilities, furniture, equipment, etc. Also, long run refers to the market being in perfect equilibrium and that is also a theoretical concept, it is not something achievable.

Answer 2

There are no fixed cost

Step-by-step explanation:

Indeed a company may not have fixed costs in the long run because of certain decisions or changes.

For example, if a company's only fixed costs is a piece of land (a fixed assets) it owns, and it then makes enough profit after 10 years that covers the cost of the land, it will no longer have fixed costs anymore.