76. The short run is characterized by

A. plenty of time for firms to either enter or leave the industry.
B. increasing but not diminishing returns.
C. fixed plant capacity.
D. zero fixed costs.

Question

76. The short run is characterized by

A. plenty of time for firms to either enter or leave the industry.
B. increasing but not diminishing returns.
C. fixed plant capacity.
D.  zero fixed costs.

BlackTom AI · Accepted Answer

To tackle the question, let's evaluate what characterizes the short run in production theory. 
Option A: 'plenty of time for firms to either enter or leave the industry.' This describes the long run, when all inputs are adjustable and firms can freely enter or exit. The short run, by contrast, has some fixed factors, so this option is not correct.
Option B: 'increasing but not diminishing returns.' In the short run, firms often experience diminishing returns to a variable input due to fixed factors, so stating only increasing returns is inaccurate. This option misstates typical short-run production physiology.
Option C: 'fixed plant capacity.' Indeed, in the short run at least one input (such as plant size or capital equipment) is fixed, so the total output changes with variable inputs but the capacity floor remains fixed. This aligns with standard short-run analysis.
Option D: 'zero fixed costs.' This is incorrect because fixed costs arise from fixed inputs and are incurred regardless of output in the short run, so fixed costs are not zero.
Overall, the options are evaluated against the standard distinction between short run and long run in production theory, with fixed plant capacity being the defining short-run feature when some inputs cannot be changed immediately. Each alternative is contrasted with the core concepts of fixed versus variable inputs and the time horizon for adjustment.

ECNM1116.32925.202530 Microeconomics Final; Spring 2025, 100 Multiple Choice Questions

76. The short run is characterized by A. plenty of time for firms to either enter or leave the industry. B. increasing but not diminishing returns. C. fixed plant capacity. D. zero fixed costs.

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