Economics · Long Run Cost Principles
Given below are two statements: Assertion (A): In the long run, all costs are variable; hence, there are no fixed costs and average fixed cost does not exist as a concept in the long run. Reason (R): Since all inputs are variable in the long run, the firm can adjust all factors of production to minimise cost for any given output level, and no input cost is predetermined or unavoidable. Choose the most appropriate answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(A) is false but (R) is true.
- 2(A) is true but (R) is false.
- 3Both (A) and (R) are true, but (R) is NOT the correct explanation of (A).
- 4Both (A) and (R) are true, and (R) is the correct explanation of (A).✓
Correct answer
Both (A) and (R) are true, and (R) is the correct explanation of (A).
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