![]() On the other hand, long-run is a period of time during which the quantities of all factors, variable as well as fixed, can be adjusted. Thus, in the short-run, only variable factors can be varied, while the fixed factors remain the same. It cannot, in the short-run, enlarge the size of the existing plant or build a new plant of a bigger capacity. ![]() If, therefore, a firm wants to increase production in the short-run, it can do so only by hiring more workers or buying and using more raw materials. In the short-run period, the fixed factors such as capital equipment, management personnel, the factory buildings, etc., cannot be altered. In Economics, distinction is often made between the short-run and long-run.īy short-run is meant that period of time within which a firm can vary its output by varying only the amount of variable factors, such as labour and raw material.
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