What Is The Short Run and the Long Run?
It is significant to be aware about these 2 concepts :
- The Short Run: In this scenario, at least 1 of the factors – either labour or capital – cannot be diversified, hence, remains constant. In order to differ the level of output, the enterprise can differ only the other factor. The factor that remains constant (fixed) is known as the fixed factor and the other factor which the enterprise can vary is known as the variable factor.
- The Long Run: In this scenario, all factors of production can be diversified or varied. An enterprise in order to manufacture different degrees of output in the long run may differ both the inputs concurrently. Hence, in the long run, there is no fixed factor.
For any particular manufacturing procedure, long run usually refers to a longer time period than compared to the short run. For different manufacturing procedures, the long run periods may be varied. It is not preferable to explain short run and long run in terms of either days, months or years. We explain a period as long run or short run simply by having a look at whether all the inputs can be varied or not.
This is a detailed and an elucidated information about the concept The Short Run and the Long Run. To learn more, stay tuned to BYJU’S.