Asked by Brian Metroz on May 11, 2024
Verified
In the long run,when a firm adds physical capital,workers become more productive,so variable costs increase.
Physical Capital
Assets used in the production process that are physical in nature, such as buildings, machinery, and equipment.
Variable Costs
Expenses that vary directly with the amount of output or business operations.
Workers
Individuals engaged in a professional or labor activity to earn wages or salaries.
- Contrast the short run and long run based on the variability of inputs.
- Understand the principle of diminishing returns and its impact on expenses and output.
Verified Answer
DM
Diana MendezMay 14, 2024
Final Answer :
False
Explanation :
When a firm adds physical capital, workers typically become more productive, which can lead to a decrease in variable costs per unit of output because the firm can produce more efficiently with the same amount of labor.
Learning Objectives
- Contrast the short run and long run based on the variability of inputs.
- Understand the principle of diminishing returns and its impact on expenses and output.