Which of the following best defines the long run in economics?

• A. A time period shorter than the short run.
• B. A time period when firms cannot enter or exit the market.
• C. A time period in which all inputs can be varied by the firm.
• D. A time period in which at least one input is fixed.

Answer: (C)

Verified step by step guidance

1. Understand the concept of the short run in economics: it is a time period during which at least one input (such as capital or plant size) is fixed and cannot be changed by the firm.
2. Recognize that the long run is contrasted with the short run, and it refers to a time period long enough for the firm to vary all inputs, meaning no input is fixed.
3. Recall that in the long run, firms have the flexibility to adjust all factors of production, including capital, labor, and technology, to optimize production.
4. Eliminate options that contradict this definition: a time period shorter than the short run is incorrect, and a time period when firms cannot enter or exit the market does not define the long run.
5. Conclude that the best definition of the long run is 'a time period in which all inputs can be varied by the firm,' as it captures the essence of input flexibility over time.