If a firm’s labor input response to a decrease in the wage differs between the short and the long run, we know that more workers will be hired after the initial short run adjustment.
244 views0 answers0 votes
If the cross-price demand curve for capital (relative to the wage) is vertical, the short run response by a firm to an increase in the wage is the same as its long run response.
243 views0 answers0 votes
The more substitutable capital and labor are in production, the more likely it is that the cross-price demand curve for capital (relative to the wage) is upward sloping.
266 views0 answers0 votes
462 views0 answers0 votes
289 views0 answers0 votes
If the rental rate increases, we know for sure that the firm will produce less and will (in the long run) use less capital.
345 views0 answers0 votes
If the wage falls, we know for sure that the firm will produce more in the long run but we cannot be sure whether it will use more or less capital.
309 views0 answers0 votes
The greater the degree of substitutability between capital and labor, the greater will be the downward shift in the cost curve when wage falls.
325 views0 answers0 votes
When output price rises, the long run increase in labor input will be larger than the short run increase in labor input.
290 views0 answers0 votes
407 views0 answers0 votes
Suppose the AC curve is U-shaped. Then an increase in a recurring fixed cost will cause the AC curve to shift up, with its lowest point shifting to the right.
319 views0 answers0 votes
Short run average expenditure curves are tangent at their lowest point to the long run average cost curve.
250 views0 answers0 votes
If the production technology has increasing returns to scale, short run marginal cost curves must be downward sloping.
293 views0 answers0 votes
Long run marginal cost curves are increasing for decreasing returns to scale production technologies.
252 views0 answers0 votes