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 concepts which involve many factors of production.
Let us know more about the long run and short run in the following lines.
Short Run: In the short run scenario, any one of the factors associated with production will be 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 fixed factors of production, while the variable factors are known as variable factors of production.
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) using the available infrastructure due to increasing demand in season time.
Long Run: In the long run, the factors associated with production and the associated costs will be 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.
Example of a long run can be of the same company ABC permanently looking to expand production capacity of cars instead of only during season time, which will require new land, labour and equipment in addition to the existing infrastructure.
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