4. In the short run, output:
A. is absolutely fixed.
B. can vary as the result of using a fixed amount of plant and equipment more or less intensively.
C. may be altered by varying the size of plant and equipment that now exist in the industry.
D. can vary as the result of changing the size of existing plants and by new firms entering or leaving the industry.

Question

4.    In the short run, output:
A.    is absolutely fixed.
B.    can vary as the result of using a fixed amount of plant and equipment more or less intensively.
C.    may be altered by varying the size of plant and equipment that now exist in the industry.
D.    can vary as the result of changing the size of existing plants and by new firms entering or leaving the industry.

BlackTom AI · Accepted Answer

Question restatement: In the short run, output: 
Options:
A) is absolutely fixed.
B) can vary as the result of using a fixed amount of plant and equipment more or less intensively.
C) may be altered by varying the size of plant and equipment that now exist in the industry.
D) can vary as a result of changing the size of existing plants and by new firms entering or leaving the industry.

Analysis of each option:
Option A: 'is absolutely fixed.' This is incorrect because, in the short run, firms do have some flexibility to use their existing inputs more or less intensively (e.g., employing more labor or using machines longer hours). Therefore output can change even with a fixed capital stock.

Option B: 'can vary as the result of using a fixed amount of plant and equipment more or less intensively.' This is true. The short run assumes capital is fixed while other inputs (like labor) can vary, so increased or decreased utilization of the same plant leads to changes in output.

Option C: 'may be altered by varying the size of plant and equipment that now exist in the industry.' This statement describes adjustments to plant size, which is a characteristic of the long run when firms can enter, exit, or expand/contract capacity. It does not pertain to the short run, making it incorrect here.

Option D: 'can vary as a result of changing the size of existing plants and by new firms entering or leaving the industry.' This also describes long-run adjustments (capital expansion or industry entry/exit). In the short run, such changes do not occur, so this option is not correct.

In summary, Option B correctly captures the short-run behavior where output changes due to varying utilization of a fixed capital stock, while the other options describe either absolute immutability or long-run adjustments that do not apply in the short run.

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