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Home Questions 7C59ZWMTQH
Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Production and Costs

Question:

Manager A of firm XYZ said to the manager B of the same firm :In long run there are no fixed costs.
To this manager B replied :So, does that mean our total cost and the total variable cost will coincide in the long run?
What you think Manager A should reply?

Options:

Yes

No

I don't know

None of above

Correct Answer:

Yes

Explanation:

The correct answer is Option 1: Yes

Here's why:

  • Long Run and Fixed Costs: In the long run, all factors of production are variable. This means that there are no fixed costs.
  • Total Cost (TC): TC = Total Fixed Cost (TFC) + Total Variable Cost (TVC).
  • In the Long Run: Since TFC = 0 in the long run, TC = TVC.

Therefore, in the long run, the total cost and total variable cost will coincide.

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