The long-run production decision differs from the short-run production decision in that: A. variable costs can be changed in the short run but not the long run. B. variable costs can be changed in the long run but not the short run. C. fixed costs can be changed in the short run but not the long run. D. fixed costs can be changed in the long run but not the short run. Explain please.
D. fixed costs can be changed in the long run but not the short run. edit: to clarify, in the long run everything is variable
I agree. The answer is simple, but the choices really make you spin. Good question!
in the “short run” firms can change all but a few things: they can add labor, reduce labor (this is the main focus at this level) but they cannot increase the plant size (e.g. machinery, buildings, land) or change technologies in the long run, everything is variable, including those things that are and are not variable in the short run so firms can add/reduce employees, change plant size, buy machinery, etc
yes, thanks.