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the analysis of provider behavior involving capital additions has been referred to as what

the analysis of provider behavior involving capital additions has been referred to as what

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Answer #1

The short run analysis takes the form of changing only one variable input namely labor. The change in capital equippment is done in the long run in the view odf changing profit. The resulting changes change the marginal and avarage cost of the firm and increases supply. As a result the long run equilibrium price falls. These changes, that is the change in market condition resulting from changes in capital, takes a long time to show the effect. Thus, the capital addition is a anlysis of long run.

Therefore, the correct answer is: long-run analysis

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