Short and Long Run

Posted by Winnie Melda on May 15th, 2019

When it comes to differentiating between variable and fixed inputs, the assertion is that the main consideration, in this case, is the duration that is known as the short run. In that case, it follows that the short run is characterized by a duration that is too short to be in a position to vary the inputs. It thus follows that one or more of the inputs in consideration has to be fixed. On most occasions, labor is the only factor of production that is considered variable in the short run. The long run, on the other hand, refers to the period whereby all the factors of production such as building, land, and equipment can be varied. When it comes to the restaurant, the building hosting the restaurant would be considered in the long run, and the only attributes that can be considered in the short term in the case of the restaurant may include such issues adding the number of cooks or tables. In the short run, the decision relating to how profit will be maximized is addressed, while in the long run, issues of the size of the restaurant that will maximize the profits will be addressed.

1. The restaurant distinguishes between the short run and the long run via the assessment of the fixed assets owned, in this case, the restaurant and the equipment. Such components that are held in the restaurant as labor, food as well as furnishings are short run since they can be varied easily as necessary to maximize profits.

Reference

Amacher, R., & Pate, J. (2013). Principles of Microeconomics. San Diego,  CA: Bridge     point Education, Inc

Carolyn Morgan is the author of this paper. A senior editor at MeldaResearch.Com in Online Paper Writing Service. If you need a similar paper you can place your order from Professional Custom Writing Services.