All of the following are characteristics of a long-run period for a firm EXCEPT:

• A. The plant capacity is fixed
• B. All costs are variable
• C. It is a period sufficient for new firms to enter or existing firms to leave an industry.
• D. Desired resource adjustment can be negotiated.

Answer: (A)

In the long run, a firm can adjust all inputs and scale its operations. This means plant capacity is not fixed, it can be increased or decreased as needed. That makes the statement about fixed plant capacity characteristic of the short run, not the long run, so it’s the exception.

In the long run there are no fixed factors of production—every input can be varied—so all costs are variable with output. The period is long enough for new firms to enter or existing firms to leave an industry, allowing industry structure to change. Also, resources and contracts can be renegotiated to align with the new optimal scale of operation.

So the only statement that doesn’t describe the long-run behavior is the plant capacity being fixed.