Question

If in the long run regarding the firm, a firm has the ability to adjust all its inputs?

Answer 1

In the long run the firms have an opportunity to adjust all its variable inputs and set their fixed inputs as well. As in the long run there is ample time for the producers to control its expenditures and costs as per the market demand and prices. Hence a firm surely possesses an ability to adjust all its inputs be it variable or fixed ones.

Example if the demand for the product increases suddenly then in the short run the production levels cannot be increased as their is defined labour and raw materials etc. Therefore the prices rise. Whereas in the long run the firm is able to employ more lqvour, capital, machinery, raw materials and increase the production thereby controlling the rising prices and increasing the supply consequently.