How many of the following statements about the short run are correct?
(A) At least one factor of production cannot be varied.
(B) The firm changes its output only by changing the variable factor.
(C) The total fixed cost curve is a horizontal straight line.
(D) The law of variable proportions can operate.
(E) Returns to scale can be observed, since output can be changed.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Four
In the short run, at least one factor is fixed and only the other can change.
(A) At least one factor of production cannot be varied. — Correct. This is what the short run means.
(B) The firm changes its output only by changing the variable factor. — Correct. The fixed factor cannot change, so output changes through the variable factor.
(C) The total fixed cost curve is a horizontal straight line. — Correct. TFC is the same at every output, so its curve is flat.
(D) The law of variable proportions can operate. — Correct. The law works when one factor is held fixed and the other is increased.
(E) Returns to scale can be observed, since output can be changed. — Incorrect. Returns to scale need all factors to change, which can happen only in the long run.
NCERT (2026-27): “3.2 The Short Run and the Long Run … In the short run, at least one of the factor – labour or capital – cannot be varied, and therefore, remains fixed. In order to vary the output level, the firm can vary only the other factor. The factor that remains fixed is called the fixed factor whereas the other factor which the firm can vary is called the variable factor.” “Shapes of the Short Run Cost Curves … Figure 3.3 illustrates the shapes of total fixed cost, total variable cost and total cost curves for a typical firm. We place output on the x-axis and costs on the y-axis. TFC is a constant which takes the value c1 and does not change with the change in output. It is, therefore, a horizontal straight line cutting the cost axis at the point c1.” “3.6 Returns to Scale The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. … Remember that this can happen only in the long run. One special case in the long run occurs when both factors are increased by the same proportion, or factors are scaled up.” |