The Difference Between the Short Run and the Long Run

question 130

Multiple Choice

The difference between the short run and the long run is

• A) economic profits are negative in the short run and positive in the long run.
• B) economic and accounting profits are not equal in the short run but are equal in the long run.
• C) that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied.
• D) the short run is a period less than a year while the long run is a period greater than a year.

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Definitions:

Fixed Cost

Expenses that do not change with the level of goods or services produced over the short term.

Expense Function

A mathematical representation or formula used to calculate the total expenses incurred by a business or individual.

Demand Function

A mathematical formula representing the relationship between the quantity demanded of a good and its affecting factors such as price, income, and preferences.

Revenue

The income a business receives from selling a product.