Question on: JAMB Economics - 2005

The long run is a period of time where all factors of production are variable. In the long run, a firm can adjust its plant size, which is a major investment decision. * **A.** Fuel and maintenance costs are typically considered short-run costs as they vary with the level of output in the short term. * **B.** The planned size of plant and equipment represents a long-run decision because a firm can alter its scale of production in the long run. * **C.** The existing size of plant and equipment represents a short-run constraint. * **D.** Rent on buildings can be either a short-run or long-run cost. However, the planned size of plant and equipment represents a bigger decision to be made in the long run.