Assertion: It is not advisable to define short run and long run in terms of say, days, months or years in the production process.

Reasoning: We define a period as long run or short run simply by looking at whether all the inputs can be varied or not.

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

The correct answer is Option 2: Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

1. Assertion (A): It is not advisable to define short run and long run in terms of days, months, or years in the production process. (Correct)

   • This is correct because the length of the short run and long run differs across industries.
   • In a small business, the long run may be a few months, whereas in a large manufacturing company, it could be several years.
   • Hence, defining them in fixed time units (e.g., months or years) is not appropriate.

2. Reasoning (R): We define a period as long run or short run simply by looking at whether all the inputs can be varied or not. (Correct)

   • This is the core definition of the short run and long run. In the short run, at least one input is fixed, while in the long run, all inputs are variable.
3.  Does (R) correctly explain (A)?
   • No. Reasoning doesn't directly address the reason for the assertion (A). It's a definition, not an explanation of why a different definition is inappropriate.
   • (R) describes the economic definition of short run and long run, but it does not directly justify why defining them in fixed time periods is inappropriate.
   • The real reason why defining short run and long run in terms of fixed time units is problematic is due to the variation in production processes across industries, not simply because inputs are variable or fixed.