In the short run, all of the following are applicable except
In the short run, all of the following are applicable except
- A) output may be increased by changing all factors by the same proportion
- B) diminishing returns
- C) there are sunk costs
- D) the total cost curve is the same as the total variable cost curve
Correct Answer: A) output may be increased by changing all factors by the same proportion
Explanation
In this Economics question, we are being asked to identify which statement is not applicable in the short run. The options given are Option A: output may be increased by changing all factors by the same proportion, Option B: diminishing returns, Option C: there are sunk costs, and Option D: the total cost curve is the same as the total variable cost curve.
The correct answer is Option A: output may be increased by changing all factors by the same proportion. This statement is not applicable in the short run because in the short run, at least one factor of production is fixed, which means it cannot be changed. Therefore, output cannot be increased by changing all factors by the same proportion.
Diminishing returns, Option B, is applicable in the short run. This refers to the fact that as more of a variable input is added to a fixed input, the marginal product of the variable input will eventually decrease.
Option C, sunk costs, is also applicable in the short run. Sunk costs are costs that have already been incurred and cannot be recovered, regardless of the decision that is made.
Option D, the total cost curve being the same as the total variable cost curve, is applicable in the short run. This is because in the short run, at least one factor of production is fixed and therefore the total cost curve cannot be the same as the total variable cost curve.
In summary, the statement that is not applicable in the short run is Option A, and this is because at least one factor of production is fixed in the short run and therefore output cannot be increased by changing all factors by the same proportion.