"The short run is an era of time in which the number of
at least one input is fixed and the quantities of the additional inputs can be
fluctuated. The long run is an era of time in which the quantities of all
inputs may be altered.
There is no time that may be noticeable on the calendar to
take apart the short run from the long run. The long run and short run
difference varies from one industry to another."
Some examples which are accommodating, so we'll think a
hockey stick manufacturer. A company in that industry may need the following to
manufacture sticks:
• Raw materials for example lumber
• A factory
• Labor
• Machinery
As short run is the period in which we may augment
production by including extra raw materials and more labor. In the short run we
may not add one more factory, but in the long run all of our inputs are
variable, as well as our factory space.
The augment in demand for hockey sticks will hold dissimilar
implications in the long run and the short run on the industry level. In the
short run each and every firms will add to their labor supply and raw materials
to meet the inserted demand for hockey sticks. At first only on hand firms will
be likely to capitalize on the increased demand since they will be the only
ones who will have right to use to the four inputs needed to make the sticks.
Though we know that in the long run the aspect input is variable too. This
means that existing firms can modify the size and number of factories they own
and new firms can create or buy factories to create hockey sticks. In the long
run we can observe new firms enter the hockey stick market; while we cannot in
the short run since firms will not be knowledgeable to get all of the inputs
they need.
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