The distinction between the short run and the long run is
A) strictly a calendar matter; the long run is over 10 years.
B) dependent solely on the time period necessary to vary all relevant inputs.
C) that, in the short run, neither inputs nor outputs can be changed.
D) that the law of diminishing marginal returns is operational in the long run but not in the short run.
E) operationally meaningless since firms continually plan for the future.

Question

Quizplus · Accepted Answer

The distinction between the short run and long run in economics is based on the time period necessary to vary all relevant inputs. In the short run, at least one input is fixed and cannot be changed, while in the long run, all inputs can be adjusted. Therefore, choice B correctly captures the essence of the distinction between the two periods.

The Distinction Between the Short Run and the Long Run