If a producer is not able to expand its plant capacity immediately, it is
A)bankrupt.
B)operating in the long run.
C)operating in the short run.
D)losing money.

Question

Quizplus · Accepted Answer

When a producer is not able to expand its plant capacity immediately, it is operating in the short run. In the short run, a producer can make adjustments to its variable inputs, but not to its fixed inputs (such as plant capacity). This means that the producer has limited flexibility to adjust its production to meet demand, and may have to operate at full capacity or turn down orders. This does not necessarily mean the producer is bankrupt or losing money, but it may limit their ability to grow and meet customer needs in the long run.

If a Producer Is Not Able to Expand Its Plant