to be met with the existing stock of capital for only a brief time, after
which it can be adjusted to the level made desirable by the higher
demand.
The short run is the length of time over which some of the firm’s factors of production are
fixed (and thus cannot be changed).As an example, consider a firm that operates a call centre in New
Brunswick and gets paid a set amount for each call answered. A short-run
change for this firm might be the addition of extra workers, phones, and
workstations so as to process more calls per hour.
The Long Run
The long run is a time period in which all inputs may be varied but in
which the basic technology of production cannot be changed. Like the
short run, the long run does not correspond to a specific length of time.
The long run corresponds to the situation the firm faces when it is
planning to go into business, to expand the scale of its operations, to
branch out into new products or new areas, or to change its method of
production. The firm’s planning decisions are long-run decisions because
they are made from given technological possibilities but with freedom to
choose from a variety of production processes that will use factor inputs
in different proportions.
The long run is the length of time over which all of the firm’s factors of production can be
varied, but its technology is fixed.