Which of the following represents a long-run adjustment in economics?

• A. A firm purchases additional raw materials for the next month.
• B. A firm builds a new factory to increase production capacity.
• C. A firm hires temporary workers to meet seasonal demand.
• D. A firm increases overtime hours for its current employees.

Answer: (B)

Verified step by step guidance

1. Understand the difference between short-run and long-run adjustments in economics. The short run is a period during which at least one factor of production is fixed, while in the long run, all factors of production can be varied.
2. Identify the nature of each option in terms of fixed and variable inputs. For example, purchasing additional raw materials or hiring temporary workers typically involves variable inputs and can be adjusted quickly, indicating short-run decisions.
3. Recognize that building a new factory involves changing fixed inputs, such as capital equipment and production capacity, which requires time and planning, characteristic of long-run adjustments.
4. Analyze the options involving labor hours, such as increasing overtime, which usually adjusts variable inputs without changing fixed capital, thus representing short-run adjustments.
5. Conclude that the option involving building a new factory represents a long-run adjustment because it changes the scale of production by altering fixed inputs, aligning with the economic definition of the long run.