Fill-in-the-Blank
1. Fill in the blanks to make the following statements correct.
a. In the long run, if a firm is maximizing its profits while
producing a given level of output, then this firm is also
its costs.
b. In the long run, all factors of production are. There
are no factors.
c. Profit-maximizing firms employ factors of production
such that the marginal products per dollar spent on each
factor are.
d. Profit-maximizing firms adjust their methods of
production in response to changes in relative prices. This
is known as the.
2. The long-run average cost curve is often saucer-shaped. Fill in the
blanks to make the following statements about the LRAC curve
correct.
a. Over the range of output where the LRAC curve is falling,
the firm is experiencing or. As output increases,
average costs are.
b. When the LRAC curve reaches its minimum, the firm has
reached its. If the curve is flat over some range of
output, we say the firm is exhibiting.
c. Over the range of output in which the LRAC curve is
rising, the firm is experiencing or. As output