The table shows how long two firms need to change all their inputs, including their plant:
| Firm | Time needed to change all inputs |
|---|---|
| A (tea stall) | 3 months |
| B (steel plant) | 2 years |
Consider a period of one year. Which of the following is correct?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → For firm A this period is the long run, and for firm B it is the short run.
Short run and long run are not fixed lengths of time. A period is the long run if all inputs can be varied in it.
In one year, firm A can change all its inputs (it needs only 3 months), so for A the year is the long run. Firm B needs 2 years, so within one year its plant stays fixed: for B the year is the short run.
NCERT (2026-27): “3.2 The Short Run and the Long Run … For any particular production process, long run generally refers to a longer time period than the short run. For different production processes, the long run periods may be different. It is not advisable to define short run and long run in terms of say, days, months or years. We define a period as long run or short run simply by looking at whether all the inputs can be varied or not.” |