Whats the main difference between the short run and the long run?

Question

A) firms earn zero profits in the long run.
B) the long run always refers to a time period of one year or longer.
C) in the short run, one or more inputs is fixed.
D) in the long run, only one variable can be fixed.

Answer 1

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In the short run, the reason some inputs cannot vary is because of timing. For instance, if you have one factory producing an item, in the short-run, you cannot increase productivity beyond that factory's production unless you buy a new factory, and since you can't buy a new factory immediately, that is an unchangable input. The same as with crops. If the price of watermelons goes up very high, you can't slash and burn your wheat crop, plant watermelons, and have them available immediately. Those things take months to change.

In the long-run, though, if you wanted to build or buy a new factory or buy more land for watermelons, you can. That is why there isn't non-variable inputs with long-run.