1. Describe in your own words when a firm is in the "short run" versus the "long run."
"Short run" versus the "Long run."
--The short run refers to the time horizon in which at least one factor of production of firm is fixed; and on contrary long run refers to the time horizon where all the factors of production of the firm are variable and there are no fixed factors.
--In a short run firm operates on law of variable proportion; and in long run firm operates on law of returns to scale
--Factor-ratio changes for the firm in short-run; however does not change in long run
--There are barriers for firms to enter in short-run; and on contrary in the long run the firms are free to enter and exit
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