Which of the following statements is false? O a. Fixed costs exist in the short run, but not in the long run. O b. Changes in variable costs are reflected dollar-for-dollar in changes in total cost. O c. Since (total) fixed costs are constant as output changes in the short run, it follows that average fixed cost is constant in the short run. O d. Marginal cost is the cost of producing an additional unit of output.
Which of the following statements is false? O a. Fixed costs exist in the short run, but not in the long run. O b. Changes in variable costs are reflected dollar-for-dollar in changes in total cost. O c. Since (total) fixed costs are constant as output changes in the short run, it follows that average fixed cost is constant in the short run. O d. Marginal cost is the cost of producing an additional unit of output.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:**Question:**
Which of the following statements is false?
**Options:**
a. Fixed costs exist in the short run, but not in the long run.
b. Changes in variable costs are reflected dollar-for-dollar in changes in total cost.
c. Since (total) fixed costs are constant as output changes in the short run, it follows that average fixed cost is constant in the short run.
d. Marginal cost is the cost of producing an additional unit of output.
**Explanation:**
- Option **c** is false because while total fixed costs remain constant in the short run as output changes, average fixed cost decreases with an increase in output, since average fixed cost is calculated as total fixed costs divided by the quantity of output produced.
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