What is the Short Run and the Long Run?
There are different periods in economics. The most prominent among them are short run and long run. These are the concepts that involve many factors of production.
Let us know more about the long run and the short run in the following points:
Short run: In the short run scenario, any one of the factors associated with production is fixed. For achieving more output, the firms may change the level of other factors necessary for production. The factors that remain fixed are known as the fixed factors of production, while the variable factors are known as the variable factors of production.
An example of a short run can be a company, ABC, which is able to produce 10 cars in a day and looks to produce more cars (15 cars per day) by using the available infrastructure due to increasing demand during the season.
Long run: In the long run, the factors associated with production, and also the associated costs, are variable. In this period, a firm achieves flexibility in making decisions. In addition to that, a firm can expect more competition in the long run.
An example of a long run can be of the same company, ABC, permanently looking to expand production capacity of cars instead of only during the season. It requires new land, labour, and equipment in addition to the existing infrastructure.
This article was all about the concept of the short run and the long run. To learn more about such concepts, stay tuned to BYJU’S.