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Chapter 9: Problem 15

A business firm is in the short run (LO6) a) virtually all the time d) rarely b) most of the time e) never c) occasionally

Short Answer

Expert verified
A business firm is in the short run most of the time (Option b).

Step by step solution

01

Option a: Virtually all the time

The short run is a time period in which at least one production factor (usually assumed to be capital) is fixed, while others can be changed. In reality, businesses can seldom be in the short run all the time because there will always be movements between short-run and long-run as situations change.
02

Option b: Most of the time

This statement is more accurate than option a. Typically, firms are in the short run most of the time because they are continuously adjusting their production levels based on changes in market demand while some resources remain fixed. However, there are also times when firms are in the long run, adjusting all their factors of production. So, this option is plausible but still needs to be compared to other options.
03

Option c: Occasionally

The term "occasionally" suggests that firms are in the short run infrequently. This is not accurate because, as mentioned earlier, companies generally spend considerable time in the short run, adjusting their output levels based on market conditions. Therefore, "occasionally" doesn't accurately represent the frequency of businesses being in the short run
04

Option d: Rarely

Similar to option c, "rarely" implies that firms are almost never in the short run, which is incorrect. Companies often operate in the short run while adjusting their output levels according to market forces.
05

Option e: Never

This option is not correct at all, as firms do spend time in the short run during their production processes while working with fixed resources. After evaluating all the options, we can conclude that:
06

The correct answer:

A business firm is in the short run most of the time (Option b).

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Most popular questions from this chapter

When marginal cost is rising but is less than average total cost, we are definitely below the \((L O 3)\) a) shut-down point b) break-even point c) maximum profit point

Statement 1: Price is equal to total revenue divided by output. Statement 2 : A firm never maximizes profits. (LO3) a) Statement 1 is true, and statement 2 is false. b) Statement 2 is true, and statement 1 is false. c) Both statements are true. d) Both statements are false.

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If a firm is producing a level of output at which that output's marginal cost is less than the price of the good, (LO3) a) it is producing too much to maximize its profits b) it is probably maximizing its profits c) higher profits could be obtained with increased production d) none of the above
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