Chapter 7.3: Cost in the Long Run
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Last updated 8:47 PM on 9/12/25
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7 Terms
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flexbility
In the long run, a firm has much more ___
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User cost of capital
the annual cost of owning and using a capital asset, equal to economic depreciation plus forgone interest.
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Wage rate
the price of labor
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Rental rate
the cost per year for renting a unit of capital.
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equal
If the capital market is competitive, the rental rate should be __ to the user cost.
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Isocost line
graph showing all possible combinations of labor and capital that can be purchased for a given total cost.
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Expansion path
the combinations of labor and capital that the firm will choose to minimize costs at each output level.
Note 
Flashcards (33)