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Questions and Answers
What defines the long run in the context of production?
What defines the long run in the context of production?
- A period in which production occurs within one year.
- A duration long enough to allow changes in all the firm's inputs, both fixed and variable. (correct)
- A timeframe that is too long to change the size of a firm's plant.
- A period in which production occurs within three months.
Which statement best describes a characteristic of the long run?
Which statement best describes a characteristic of the long run?
- It is limited to one year for making production changes.
- It is defined by a maximum timeframe of six months.
- It allows for adjustments in both fixed and variable inputs. (correct)
- It is a time interval where only fixed inputs can be adjusted.
Which option inaccurately represents the concept of the long run?
Which option inaccurately represents the concept of the long run?
- It is a period that can vary in length depending on the firm's context.
- It restricts changes to only variable inputs. (correct)
- It is longer than the short run, where some inputs are fixed.
- It permits changes in all the firm's inputs.
In relation to production changes, what is true of the long run?
In relation to production changes, what is true of the long run?
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How is the long run typically perceived in economic terms?
How is the long run typically perceived in economic terms?
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Study Notes
The Long Run in Economics
- In economics, the long run is a period of time where all inputs of production can be adjusted.
- This includes both fixed inputs (like capital) and variable inputs (like labor).
- The length of the long run is determined by how long it takes for a business to adjust all of its inputs.
- In contrast, the short run is when at least one input is fixed, and the business can only adjust variable inputs.
- Factors that contribute to the length of the long run include the nature of the industry, the technology used, legal restrictions and more.
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