Answer to Question #109444 in Microeconomics for Bijay ray

Question

Explain the concept of short run and the long run as associated with a firm

Answer 1

In the short run the costs of the firm can be divided into the fixed and variable ones. The fixed costs are connected with the inputs that are unchangable (the cost of equipment, for example). The long run in microeconomics is the period of time when all the inputs of production become variable (the firm can change the volume of capital).