A major characteristics of a firm operating at a long-run equilibrium position is that

Step 1: Analyze the question The question asks about a key feature of a firm in the long run. The key is understanding how the "long run" is defined in economics.

Step 2: Explain the concept

• Short run: At least one factor of production (usually capital, such as machinery or factory size) is fixed. So the firm has both fixed costs and variable costs.
• Long run: The period of time long enough for the firm to change all factors of production. No input is fixed, so all costs become variable. The firm can expand its plant, buy new machinery, or even leave the industry.

In long-run equilibrium (especially under perfect competition), the firm also earns normal profit, with price equal to average cost (P = AC = MC).

Step 3: Evaluate each option

• A. Average variable cost is fixed: Wrong. Average variable cost changes with output, and in the long run there is no fixed/variable distinction anyway.
• B. All costs can be varied: Correct. This is the defining feature of the long run.
• C. Only variable cost changes: Wrong. This describes the short run, where fixed costs stay constant.
• D. Fixed cost cannot be changed: Wrong. This also describes the short run. In the long run, no cost is fixed.

Step 4: Answer The correct option is B. all costs can be varied.

Exam tip: Remember it this way: "Long run = Long enough to change everything." If an option says something is fixed, it is describing the short run. If it says everything is variable, it is describing the long run.