Short run versus long run, Microeconomics

The Short Run versus long Run

- Short-run:

  • Period of time in which the quantities of one or more production factors cannot be changed.
  • These inputs are called as fixed inputs.

- Long-run

  • Amount of time required to make the entire production inputs variable.

    1714_short run vs long run.png

    Observations:

 1)  With the additional workers, output (Q) increases, reaches the maximum limit, and then decreases.

  2) The average product of labor (or AP), or output per worker, increases 1st and then decreases.
1301_short run vs long run1.png

3) The marginal product of labor (or MP), or output of additional worker, increases quickly initially and then decreases and becomes negative.
1062_short run vs long run2.png


2430_short run vs long run3.png

401_short run vs long run4.png

Observations:

- When MP = 0, TP is at the maximum

- When MP > AP, AP is gets increased

- When MP < AP, AP  is gets decreased

- When MP = AP, AP is at the maximum

AP = slope of line from the origin to a point on TP, lines b, and c.

 MP = slope of a tangent to any point on the TP line, lines a and c.

Posted Date: 10/10/2012 9:21:48 AM | Location : United States







Related Discussions:- Short run versus long run, Assignment Help, Ask Question on Short run versus long run, Get Answer, Expert's Help, Short run versus long run Discussions

Write discussion on Short run versus long run
Your posts are moderated
Related Questions

If the MU of the 1st unit consumed = 75 utils, and the TU of consuming 2 units is 130 utils, what is the marginal utility of the second unit?

Choosing Output in Long Run * In long run, a firm can change all its inputs, including size of the plant. * We are taking free entry and free exit. * Accounting

what is traditional economy 2 features of traditional economy

Expected Value - The weighted average of payoffs or values resulting from all the possible outcomes. The probabilities of every outcome are used as weights Expected

NETWORK EXTERNALITIES Till this point we have assumed that people's demands for good are independent of each other. Actually, a person's demand can be affected by the number

Much of undergraduate macroeconomic theory is discussed on the assumption that, in the short run, the expectations of economic agents about the future values of macroeconomic varia

(a) Describe the different types of inflation in a country. (b) Describe the trade-off between inflation and unemployment, using appropriate diagrams. (c) Mauritius has bee

Q. Definition of labour force? Labour Force:Total population of working-age people who are willing and able to work and who thus have ‘entered' labour market. Labour force incl

How the above would apply to non-renewable resources such as oil. This has general applicability to any competitive market. The issue here is that potential supply has a finite