In the short run, a firm
A) has at least one fixed factor of production.
B) can enter an industry where positive profits are being earned.
C) can exit an industry, and all of its factors of production are variable.
D) both B and C are correct.

Question

Quizplus · Accepted Answer

In the short run, a firm has at least one fixed factor of production, meaning that it cannot adjust all of its inputs to production. This fixed factor can be, for example, a lease on a building or specialized equipment. Therefore, choice A is the correct answer, while choices B and C are not accurate descriptions of the short-run conditions for a firm.

In the Short Run, a Firm