what is long run in economics Long run The long run is a situation where all main factors of production are variable The firm has time to build a bigger factory and respond to changes in demand In the long run We have time to build a bigger factory Firms can enter or
The long run is a period of time in which the quantities of all inputs can be varied There is no fixed time that can be marked on the calendar to separate the short run from the long run The short run and long run The long run in economics indicates the period in which factors of production and costs are evaluated as variables Fixed factors of production do not exist over a long period It is this phase where producers strategize and put their plans into action Fixed cost is commonly a short term attribute
what is long run in economics
what is long run in economics
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In economics the long run is a theoretical concept in which all markets are in equilibrium and all prices and quantities have fully adjusted and are in equilibrium The long run contrasts with the short run in which there are some constraints and markets are not fully in equilibrium Long run Quantity of labor the quantity of capital and production processes are all variable i e changeable Measuring Costs The long run is sometimes defined as the time horizon over which there are no sunk fixed costs In general fixed costs are those that don t change as production quantity changes
Consider the long run Suppose the firm s demand increases to 15 documents per day What might the firm do to operate more efficiently If demand has tripled the firm could acquire two more PCs which would give us a new short run production function as Table 7 12 below shows In contrast the long run in macroeconomic analysis is a period in which wages and prices are flexible In the long run employment will move to its natural level and real GDP to potential
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Long Run Aggregate Supply The long run aggregate supply LRAS curve relates the level of output produced by firms to the price level in the long run In Panel b of Figure 22 5 Natural Employment and Long Run Aggregate Supply the long run aggregate supply curve is a vertical line at the economy s potential level of output Generally speaking the long run is the period of time when all costs are variable It is not a precise period of time because it depends on the specifics of each firm If you have a one year lease on your factory then the long run is any period longer than a year since after a year you are no longer bound by the lease
The long run is the period of time when all costs are variable The long run depends on the specifics of the firm in question it is not a precise period of time If you have a one year lease on your factory then the long run is any period longer than a year since after a year you are no longer bound by the lease Geoff Ball 10 years ago In the long run the price doesn t matter because any increases or decreases in price will be cancelled out by decreases or increases in costs wages input costs etc If prices double so do wages so people have no additional spending power Firms will produce the same and households will buy the same
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what is long run in economics - Long run Quantity of labor the quantity of capital and production processes are all variable i e changeable Measuring Costs The long run is sometimes defined as the time horizon over which there are no sunk fixed costs In general fixed costs are those that don t change as production quantity changes