[amp_mcq option1=”short run” option2=”market period” option3=”long run” option4=”secular run” correct=”option2″]<\/p>\n
The correct answer is: B. market period<\/strong><\/p>\n The market period is the shortest period of time in which all factors of production are fixed. This means that the firm cannot change its plant size, equipment, or the number of workers it employs. In the market period, the firm can only change its output by varying the amount of variable inputs it uses.<\/p>\n The figure shows the short-run average cost (SRAC) and short-run marginal cost (SRMC) curves of a firm. The SRAC curve is U-shaped because of the law of diminishing returns. The SRMC curve cuts the SRAC curve at its minimum point. This is because the firm can only produce at its lowest average cost when it is producing at its efficient scale.<\/p>\n The firm will produce at the point where the SRMC curve intersects the demand curve. This is the point of equilibrium, and it determines the price and output of the firm in the market period.<\/p>\n The other options are incorrect because:<\/p>\n [amp_mcq option1=”short run” option2=”market period” option3=”long run” option4=”secular run” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-51643","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n\n