The assumption of a fixed number of firms is appropriate for analysis of
A)the short run but not the long run.
B)the long run but not the short run.
C)both the short run and the long run.
D)neither the short run nor the long run.

Question

Quizplus · Accepted Answer

In the short run, the number of firms is typically fixed due to constraints like capital and entry barriers. In the long run, firms can enter or exit the market, so the number of firms is not fixed.

The Assumption of a Fixed Number of Firms Is Appropriate