In the short run, a firm that produces and sells house paint can adjust which of the following?

• A. Its fixed costs
• B. The number of competitors in the market
• C. The amount of labor used in production
• D. The size of its factory

Answer: (C)

Verified step by step guidance

1. Understand the distinction between fixed and variable inputs in the short run. Fixed inputs, such as factory size or capital equipment, cannot be changed immediately, while variable inputs, like labor or raw materials, can be adjusted.
2. Identify which factors are fixed in the short run. Typically, fixed costs include things like factory size and machinery, which cannot be changed quickly without significant time or investment.
3. Recognize that the number of competitors in the market is determined by market conditions and entry/exit barriers, which the individual firm cannot control in the short run.
4. Focus on the variable inputs the firm can control in the short run. Labor is a common variable input because the firm can hire more workers or reduce labor hours relatively quickly.
5. Conclude that the firm can adjust the amount of labor used in production in the short run, while fixed costs, factory size, and the number of competitors remain unchanged.