When firms analyze the relationship between their level of production and their costs, they separate the time period involved into
A)morning and evening.
B)6 months or less; 6 months to 1 year; more than 1 year.
C)a fixed period and a variable period.
D)the short run and the long run.

Question

Quizplus · Accepted Answer

When firms analyze the relationship between their level of production and their costs, they separate the time period involved into the short run and the long run. The short run refers to a period of time in which some factors of production, such as labor or equipment, are fixed, while others, such as raw materials or energy, can be varied. The long run refers to a period of time in which all factors of production can be varied, including the size of the firm's production facility.

When Firms Analyze the Relationship Between Their Level of Production