Which of the following statements is correct?
A)A firm can operate in either the short run or the long run.
B)While a firm can plan as if it is in the long run,it can operate only in the short run.
C)The short run is a period of time of less than six months.
D)The short run is a period of time of less than one year.

Question

Quizplus · Accepted Answer

The distinction between the short run and the long run in economics is not defined by a specific duration of time, such as six months or one year, but rather by the flexibility of a firm to change all of its inputs. In the short run, at least one input is fixed, while in the long run, a firm can adjust all inputs and thus can plan for full flexibility. This makes option B correct, as it accurately reflects the conceptual difference between planning and operating capabilities of firms with respect to time frames.

Which of the Following Statements Is Correct