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.

---

Definitions:

New Plant Addition

The establishment of an additional manufacturing or production facility to expand capacity or capabilities.

Total Construction Cost

The complete financial expenditure involved in constructing a building or infrastructure, encompassing material, labor, equipment, and indirect costs.

Operating Cost

Refers to the ongoing expenses associated with the running of a business, such as utilities, rent, payroll, and maintenance.

Location Decision

The process of selecting a geographical location for a company’s operations, facilities, or investments, considering factors such as cost, accessibility, and legal requirements.