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Microeconomics
Posted 4 months ago
From Schear to Eternity is a bakery specializing in baking bagels.
Which of the following is most likely to be an input that can be adjusted in the long run, but not the short run?
Choose 1 answer:
(A) the flour, an ingredient used in the dough
(B) the workers in the bakery
(C) the industrial sized oven used to bake bagels.
(D) the yeast, an ingredient used in the dough
(E) natural gas to power the ovens
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Answer from Sia
Posted 4 months ago
Solution
a
Long Run vs. Short Run: In microeconomics, the long run is a period during which all inputs can be varied, while the short run is a period during which at least one input is fixed
b
Fixed vs. Variable Inputs: Ingredients like flour and yeast (options A and D) and natural gas (option E) are variable inputs that can be adjusted in both the short run and long run
c
Labor Flexibility: Workers (option B) can be adjusted in both the short run and long run, as hiring and firing can occur relatively quickly
d
Capital Equipment: The industrial-sized oven (option C) is a fixed input in the short run because it requires significant time and investment to adjust. In the long run, however, the bakery can invest in new ovens or sell old ones
Answer
(C) the industrial sized oven used to bake bagels.
Key Concept
Long Run Adjustments
Explanation
In the long run, all inputs, including capital equipment like industrial-sized ovens, can be adjusted. In the short run, such adjustments are not feasible due to the time and investment required.
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