21) The main difference between the short run and the long run is that:

A) in the short run all inputs are fixed, while in the long run all inputs are variable.

B) in the short run the firm varies all of its inputs to find the least-cost combination of inputs.

C) in the short run, at least one of the firm's input levels is fixed.

D) in the long run, the firm is making a constrained decision about how to use existing plant and equipment efficiently.

Answer:

22) The "law of diminishing marginal returns" applies to:

A) the short run, but not the long run.

B) the long run, but not the short run.

C) both the short run and the long run.

D) neither the short run nor the long run.

Answer:

23) An implicit cost is defined as:

A) the opportunity cost of using a resource that is not explicitly paid out by the firm.

B) the difference between an input's explicit cost and its actual cost.

C) the amount by which economic profit exceeds accounting profit.

D) the amount by which the money spent on an input to production exceeds its opportunity cost.

Answer: