Final answer:
The assumption that a firm regards the number of workers it employs as variable applies to the long run, where all costs are variable, including labor and capital inputs. The correct option is D.
Step-by-step explanation:
The assumption that a firm regards the number of workers it employs as variable is realistic in a situation that defines the long run. In economics, the long run is a period of time when all costs are variable, and no costs are fixed. This means that in the long run, a firm can change all input levels, including both labor and capital.
This scenario often occurs when the size of a firm's factory is not fixed because the firm is not bound by fixed factors like property leases or capital equipment contracts, making it flexible to adjust its operations, build new factories, and employ more workers or fewer workers depending on its strategic decisions.
Therefore, the correct answer is: if the size of its factory is also fixed, then it refers to the long run (since it implies that eventually, even these fixed inputs like the factory size can become variable). This definition highlights that it's not about the timespan alone but the ability of the firm to modify its scale of operations and employment.