Which of the following statements is not true: In the long-run,
Which of the following statements is not true: In the long-run,
- A) Total cost equals variable cost
- B) Average cost equals average variable cost
- C) Average fixed cost equals zero
- D) Average cost is the addition of average fixed cost and Average variable cost
Correct Answer: A) Total cost equals variable cost
Explanation
This Economics question is asking you to choose which statement among the options is false when considering the long-run.
Option A states that total cost equals variable cost, and this statement is false in the long-run. In the long-run, all costs are variable costs, including fixed costs. So, Option A is the correct answer.
Option B states that average cost equals average variable cost. This statement is true in the long-run because both average cost and average variable cost include all costs, including variable costs and fixed costs.
Option C states that average fixed cost equals zero. This statement is false in the short-run because fixed costs are divided by a smaller quantity of output. However, in the long-run, fixed costs are spread over a larger quantity of output, so average fixed cost approaches zero.
Option D states that average cost is the addition of average fixed cost and average variable cost. This statement is true in the long-run because average cost includes all costs, both fixed and variable.
In summary, the correct answer to this question is Option A, which states that total cost equals variable cost in the long-run. This is false because in the long-run, all costs are variable costs, including fixed costs.