Which of these assumptions is often realistic for a firm in the short run? a. The firm can vary both the size of its factory and the number of workers it employs. b. The firm can vary the size of its factory but not the number of workers it employs. c. The firm can vary the number of workers it employs but not the size of its factory. d. The firm can vary neither the size of its factory nor the number of workers it employs.
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In the short run, firms typically face some constraints when adjusting their operations. The most realistic scenario is that a firm can vary the number of workers it employs but not the size of its factory. This is because altering the factory size requires substantial investment and time, whereas hiring or laying off workers can be done much more quickly in response to demand fluctuations. This assumption aligns with the concept of fixed and variable inputs in production. While a firm may find it beneficial to hire additional workers to meet an increase in demand, expanding the factory would often require long-term planning and capital expenditure, making it less feasible in the short-term landscape.