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Which of the following best applies to the distinction between the "long-run" and the "short-run"? A....

Which of the following best applies to the distinction between the "long-run" and the "short-run"? A. the short-run is a period of approximately 1-6 months while the long-run is any time frame which is longer. B. in the short-run, only new firms may enter, while in the long-run, firms may either enter or exit the market. C. the rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon. D. all of the above

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Answer #1

C. The rationing function of price is a short run phenomenon whereas the guiding function is a long run phenomenon.

Rationing function means deviation from equilibrium price which can happen in the short run as in the long run price returns to its equilibrium level. Guiding function of price refers to movement of resources due to a change in the equilibrium price which can happen in the long run.
In the short run, firms can neither entry nor exit the market. Also, any time period extending short run is not long run because there is also medium-run. And long-run time period varies for industries.

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