Question 47

Input options will be fewer compared to the long run

A business experiencing a short-term increase in holiday business typically has fewer input options compared to the long run due to the immediate constraints of operational capacity and resources.

A) All inputs are variable

This statement is incorrect because, in the short run, some inputs are fixed while others may be variable. Businesses cannot change all inputs instantaneously, particularly in response to a sudden increase in demand.

B) Input options will be fewer compared to the long run

This is correct as businesses often have limited flexibility in the short term. They may not be able to hire additional staff or increase production capacity quickly in response to a holiday surge, thus having fewer options compared to the long run when they can adjust all factors of production.

C) Input options will be greater compared to the long run

This statement is incorrect because, during a short-term increase in demand, a business's ability to adjust inputs is limited. In the long run, businesses can make broader changes to their input mix, leading to greater flexibility.

D) All inputs are fixed

This option is also incorrect. While some inputs may be fixed in the short run, not all inputs are fixed; businesses can still adjust certain variable inputs to meet increased demand.

Conclusion

The correct answer highlights the constraints businesses face in the short run, where input flexibility is limited. All other options fail to accurately represent the characteristics of short-term operational capabilities, underscoring the importance of understanding the differences between short-run and long-run production adjustments.