Final answer:
The long run refers to a period when firms can adjust their plant size and all costs are variable, with no fixed production inputs. This timeframe is not exact, but it generally allows for significant changes such as building new facilities or purchasing new machinery.
Step-by-step explanation:
The time period in which firms can adjust their plant size is known as the long run. During the long run, all costs become variable, allowing companies to modify their production capacities. This period is not defined by an exact time frame but is relative to the individual firm's circumstances. For example, a firm with a one-year lease on a factory would not consider any period less than a year as the long run. After the lease expires, however, the firm is free to make significant changes such as investing in new machinery or closing facilities, thus entering the long run.
No costs are fixed in the long run, allowing firms great flexibility in their operational decisions, including the comparison of alternative production technologies or processes.
However, there is no precise way to distinguish between the short run and the long run with specific measures of time; it varies depending on the business. In the short run, firms are limited by their fixed inputs, but in the long run, all factors of production can be adjusted.