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Unformatted text preview: 1. How much of each input to demand 2. Which production technology to use 3. How much supply Short-Run vs. Long-Run In the short-run , two conditions hold: 1. firm is operating under a fixed scale of production – i.e. at least one input is held fixed (ex. it may be optimal for a firm to buy new machinery, but it can’t do so overnight) 2. firms can neither enter nor exit an industry In the long-run : x there are no fixed factors of production, so firms can freely increase or decrease scale operation x new firms can enter and existing firms can exit the industry Page 87...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10
- Supply And Demand