Profits In The Short Run And The Long Run
Economics notes
Profits In The Short Run And The Long Run
➡️ In the short run, output is determined by the amount of inputs available and the technology used to produce the output. Output can be increased by increasing the amount of inputs or by improving the technology used.
➡️ In the long run, output is determined by the amount of capital and labor available, as well as the technology used. Output can be increased by increasing the amount of capital and labor, or by improving the technology used.
➡️ In both the short run and the long run, output can be increased by increasing the efficiency of production, which can be done by improving the organization of production or by introducing new technologies.
What is the difference between profits in the short run and the long run?
Profits in the short run are profits earned over a shorter period of time, usually within a year or less. Profits in the long run are profits earned over a longer period of time, usually more than a year. In the short run, firms may be able to adjust their production levels to maximize profits, but in the long run, firms must adjust their production levels to the market demand in order to remain profitable.