Question

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,
a. the size of the factory is fixed.
b. output is not variable.
c. the number of workers used to produce the firm's product is fixed.
d. there are no fixed costs.

Answer 1

A. The size of the factory is fixed.

We know there will always be costs of rent and etc when running a business so even in the short run there is fixed costs. The output is always variable depending on the number of workers. The number of workers is also not fixed, but the size of the factory is because you cant just get up and move your business over night, it costs money and is a lot of work.