CFA Practice Question

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CFA Practice Question

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.
Correct Answer: I

In the long run, all inputs are variable, so no costs are fixed.

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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