Question

A small business owner claims that in a period of three months, she can comfortably expand her business and change all the inputs necessary for operation. Based on this, economists conclude that:

This business's long run is less than four months, and its short run is exactly two months.

The long run period of time is unknown, because the long run is defined as a period during which all inputs can be doubled. We don't know when inputs can be doubled; only the business owner knows this.

This business's short run is three months and shorter, and its long run is three months and longer.

The long run depends on the diminishing returns for the firm. We don't have this information, so the long run is unknown. This business's short run is three months or longer, and its long run is six months or longer.

Answer 1

For a business a short run is the time when he cannot change all the inputs i.e. there are some fixed inputs like land, machinery, building etc. Long run is a time when all of this can be changed.

the answer is "C".

This business's short run is three months and shorter, and its long run is three months and longer.