Question
Explain the concepts of the short run and the long run.
✓
Answer
Short run is a period of time when some factors of production are fixed and some are variable. So that, output can be increased only by increasing the application of variable factor. In the short run, scale of production remains constant. Long run is a period of time when all factors of production are variable. So that, output can be increased by increasing the application of all factors of production. In the long run, scale of output can be changed.
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