Asked by Jenna D'Amour on May 05, 2024
Verified
When a firm adds physical capital,its variable cost will decrease in the long run.
Physical Capital
Tangible assets such as buildings, machinery, and equipment used in the production of goods and services.
Variable Cost
Costs that vary directly with the level of production, such as raw materials, labor, and energy used in the manufacturing process.
Long Run
A period in economics during which all factors of production and costs are variable, allowing for the full adjustment to changes.
- Comprehend the impact of adding physical capital on a firm's costs and productivity.
- Master the understanding of variable and fixed costs associated with manufacturing processes.
Verified Answer
Learning Objectives
- Comprehend the impact of adding physical capital on a firm's costs and productivity.
- Master the understanding of variable and fixed costs associated with manufacturing processes.
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