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Basic Question 1 of 9

In the long run, ______

I. no costs are fixed.
II. fixed costs are always greater than variable costs.
III. fixed costs equal variable costs.
IV. costs are increased but remain in the same proportion as in the short run.
V. costs are rising.

User Contributed Comments 5

User Comment
jasonkwk why III is wrong?
Bududeen Because there are no fixed costs in the long run
schweitzdm III tricked me as well. Good point @Budu.
fangluez In the text, "in the long-run, all resources used by the firm are variable".
choas69 thus we have economies of scale theory
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

describe how economies of scale and diseconomies of scale affect costs.

CFA® 2024 Level I Curriculum, Volume 2, Module 8.