Question

In considering the behavior of firms in the marketplace, we differentiate between the short run and the long run. The distinction between these two time horizons is that:

Answer 1

The distinction between the short run and the long run in the context of business is that in the short run, firms cannot change the usage of fixed inputs, while in the long run, the firm can adjust all factors of production.

Step-by-step explanation:

In the context of business, the distinction between the short run and the long run is that in the short run, firms cannot change the usage of fixed inputs, while in the long run, the firm can adjust all factors of production. Fixed inputs are resources that cannot be easily changed, such as land and buildings. In the short run, firms can only vary their variable inputs, such as labor and raw materials, to adjust their output levels.