Which of these assumptions is often realistic for a firm in the short run?
A)The firm can vary both the size of its factory and the number of workers it employs.
B)The firm can vary the size of its factory but not the number of workers it employs.
C)The firm can vary the number of workers it employs but not the size of its factory.
D)The firm can vary neither the size of its factory nor the number of workers it employs.

Question

Quizplus · Accepted Answer

In the short run, a firm may not have the flexibility to change the size of its factory since it may involve upfront costs and time. However, it may be able to vary the number of workers it employs to meet changes in demand. Therefore, option C is the most realistic assumption for a firm in the short run.

Which of These Assumptions Is Often Realistic for a Firm