Question

The basic characteristic of the short run is that:

A. barriers to entry prevent new firms from entering the industry
B. the firm does not have sufficient time to change the size of its plant
C. the firm does not have sufficient time to cut its rate of output to zero
D. a firm does not have sufficient time to change the amounts of any of the resources it employs.

Answer 1

Answer:

Option (B) is correct.

Explanation:

The basic characteristic of the short run is that the firms don't have much time to adjust its size because it engages in a market for a shorter period of time. Alternatively, in a long run, the firms have much time to adjust their output and the size of their plant overtime.

And the firms are facing both the fixed cost as well as variable costs, this means that the wages, prices and output don't have freedom to reach to the new equilibrium.