Long run and short run decision making is very different. In the short-run firms make decisions based on the fact that they cannot change inputs, whereas in the long run, inputs can vary. For example, I am going to brew beer. In the short-run, I need to have all of the necessary equipment and resources to produce beer. I cannot change these inputs because beer cannot be brewed without them. In the long-run, I can vary the inputs. If I start to brew a Bavarian Lager, I may decide to add a wheat beer to my repertoire. I also may decide to alter the look of my labels and bottles. Additionally I may decide to use revenue and invest in better technology for pasteurizing my brews. All of these can vary as I continue to produce and sell beer.
The pursuit of Truth continues armed with the ability to think, reason, and always ask "Why?". This site is dedicated to the Spanish Scholastics of the School of Salamanca who helped lay the foundation of free-market economics.
Tuesday, October 28, 2008
What are the differences between long-run and short-run decison making?
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