Which of the following can a firm do in the long run but not in the short run?
A)Decrease the size of its physical plant
B)Reduce its rate of output by laying off workers
C)Increase its variable costs
D)Increase its use of raw materials

Question

Quizplus · Accepted Answer

Decreasing the size of its physical plant involves making long-term decisions about the firm's capital assets and infrastructure, which cannot be done in the short run.

Answer: B
 In the short run, a firm may not be able to reduce its rate of output by laying off workers because it may have fixed contracts or other obligations that require a certain level of production. However, in the long run, the firm can adjust its labor force and production levels to better match market demands.

Answer: C and D
 Both increasing variable costs (such as advertising or research and development expenses) and increasing the use of raw materials can be done in both the short and long run, as they involve operational decisions rather than capital investments.

Which of the Following Can a Firm Do in the Long