Explain the concepts of the short run and the long run.
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Explain the concepts of the short run and the long run.
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Short run: In the short run, a firm cannot change all the inputs, which means that the output can be enlarged (decreased) only by employing more (less) of the  inconstant factor (labour). It is generally presumed that in the short run a firm does not have adequate or sufficient time to vary its fixed factors such as, installing a new machine, building, plant etc. Hence, the output levels vary only because of varying employment levels of the variable factor (labour, raw material etc). 

Algebraically, the short run production function is expressed as

Where, Qx= f (L, K) 

Qx= units of output x produced

L = labour input

 K = Constant units of capital

Thus, in the short run, there will be some factors of production that are fixed at predetermined levels, eg: a farmer has a fixed amount of land.

Long run:

 In the long run, a firm can change all its inputs, which means that the output can be enlarged (decreased) by employing more (less) of both the inputs - variable and fixed factors. In the long run, all inputs (including capital) are variable and can be changed according to the need levels of output. The law that clarifies this long run concept is called returns to scale. The long run production function is expressed as 

Qx=f(K,L)

Both L and K are variable and can be varied.

 In other words, it is the time period where supplies can adjust itself to change in demand. 

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