In the context of the Production Possibilities Frontier (PPF), which statement best describes the amount of calendar time associated with the 'long run'?

• A. It is the time required for a firm to reach productive efficiency.
• B. It is not defined by a specific calendar time, but rather by the period in which all inputs can be varied.
• C. It refers to a period of less than one month.
• D. It is always exactly one year.

Answer: (B)

Verified step by step guidance

1. Understand the concept of the 'long run' in microeconomics, especially in the context of production. The long run is a time period in which all inputs or factors of production can be varied by the firm.
2. Contrast the long run with the short run, where at least one input is fixed and cannot be changed. This distinction is crucial for understanding production decisions and cost structures.
3. Recognize that the long run is not defined by a specific calendar time (such as days, months, or years), but rather by the flexibility firms have to adjust all inputs.
4. Apply this understanding to the Production Possibilities Frontier (PPF), which shows the maximum output combinations given available resources and technology. The long run allows for changes in all inputs, potentially shifting the PPF outward.
5. Conclude that the best description of the long run is the period in which all inputs can be varied, rather than a fixed calendar time.