A difference between the short run and the long run is that a firm in the short run:
A)faces an unconstrained cost minimization problem, whereas the firm is constrained in the long run.
B)faces a constrained cost minimization problem, whereas the firm is unconstrained in the long run.
C)faces a constrained cost minimization problem in both the short run and the long run.
D)faces an unconstrained cost minimization problem in both the short run and the long run.

Question

Quizplus · Accepted Answer

In the short run, a firm is constrained by its existing fixed inputs, such as buildings and machinery, and cannot easily change them. Therefore, the firm faces a constrained cost minimization problem. However, in the long run, the firm can adjust its fixed inputs as well, making it unconstrained in its cost minimization problem.

A Difference Between the Short Run and the Long Run