A decision maker cannot adjust capacity over the short run.

Question

Quizplus · Accepted Answer

Capacity refers to the maximum level of output a firm can produce with its existing resources. Adjusting capacity often requires significant investments in new equipment, technology, and infrastructure, which cannot be made quickly or easily. Therefore, capacity adjustments are usually considered a long-term decision, and decision-makers cannot typically change their capacity to meet immediate changes in demand or other short-run fluctuations.

A Decision Maker Cannot Adjust Capacity Over the Short Run