Question

How is the short run difined in production theory and how does it differ from the long run?

Answer 1

Short run in production theory states that at least one factor of production is fixed while others are variable. It is usually a time period of fewer than 4 to 6 months. Short run in production differs from the long run in that in the long run, all factors of production in a firm are variable. The long run period is usually a time period greater than 4 to 6 months, and firms can be able to adjust all costs.