Why is the short run NOT the same length of time for all firms and industries?
A) because the marginal product of capital begins to diminish at different levels of capital utilization across firms
B) because the average product of labour varies across industries
C) because the life span of capital and the extent of capital specialization will vary across firms and industries
D) because entrepreneurs have different tastes and preferences

Question

Quizplus · Accepted Answer

The short run is defined as the period of time in which at least one input is fixed, typically capital. The length of the short run will differ for each firm and industry because firms invest in different types of capital with varying life spans and levels of specialization. For example, a firm that produces furniture may have specialized equipment that is not easily transferable to other industries, meaning the short run for that firm could be longer than a firm that produces a more generic product. Therefore, the life span of capital and the extent of capital specialization will vary across firms and industries, making the short run different for each one.

Why Is the Short Run NOT the Same Length of Time