In the market short run,

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BlackTom AI · Accepted Answer

The prompt provided an incomplete multiple-choice item: the question is stated as 'In the market short run,' but no answer options are listed. Additionally, the field labeled 'answer' includes a single statement: 'existing firms may change the quantity they are supplying.' To evaluate reasoning, we must consider what the short-run behavior of firms in a market typically entails, even in the absence of explicit options.

First, in microeconomic theory, the short run is defined as a period during which at least one input (such as capital or plant size) is fixed. Firms cannot adjust their scale of plant capacity quickly, but they can modify the variable inputs (like labor and raw materials) and, therefore, adjust the quantity they produce. This means that, holding fixed factors constant, firms respond to price signals by changing output levels, leading to changes in market supply.

Second, given the price signal in the short run, existing firms have two main levers to adjust supply: (a) alter the rate of production by varying variable inputs, which changes the quantity supplied, and (b) respond to marginal cost changes as market conditions shift. These actions reflect the typical short-run supply behavior where the quantity supplied by each firm is responsive to market price, while the fixed plant capacity constrains the extent of adjustment.

Third, the statement that 'existing firms may change the quantity they are supplying' captures this core concept: firms can increase or decrease output by varying inputs in the short run, even though they cannot immediately alter long-run capacity. This aligns with standard short-run supply theory, where the supply curve reflects how much firms are willing to produce at each price given fixed inputs.

Fourth, if we were to compare other possible options (had they been present), we would assess whether they incorrectly imply that firms cannot alter output in the short run, or whether they suggest changes in plant size or entry/exit dynamics that are not characteristic of the short-run timeframe. A correct short-run description should emphasize variable-output adjustment while fixed factors limit the degree of change.

In summary, the key takeaway is that, in the short run, existing firms adjust their production levels by changing the quantity they supply in response to price and marginal costs, even though their fixed inputs (like plant capacity) cannot be changed immediately. This understanding underpins why the statement about changing quantity supplied accurately describes short-run firm behavior, while other formulations that deny output adjustments or mischaracterize capacity are inconsistent with standard short-run analysis.

ECON 4010-090 Summer 2025 Quiz 3

In the market short run,

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