Which of the following statements is correct?

Question

In the long run, all inputs are fixed.

In the long run, all inputs are variable.

In the long run, no inputs are variable.

Each of the average cost variables is decreasing as output increases.

Answer 1

The correct statement is:

In the long run, all inputs are variable.

In economic theory, the long run is defined as a period in which all factors of production and costs are variable, meaning that firms can adjust all inputs to production (like labor, capital, and materials) to achieve their desired level of output.