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ECON 101 2Midtermreview

One way to find the profit maximizing output is to

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Unformatted text preview: e decisions are irreversible (or very costly to reverse). Other decisions are easily reversed and are less critical to the survival of the firm, but still influence profit. All decisions can be placed in two time frames: The short run The long run The Short Run The short run is a time frame in which the quantity of one or more resources used in production is fixed. For most firms, the capital, called the firm’s plant, is fixed in the short run. Other resources used by the firm (such as labour, raw materials, and energy) can be changed in the short run. Short- run decisions are easily reversed. The Long Run The long run is a time frame in which the quantities of all resources—including the plant size— can be varied. Long- run decisions are not easily r...
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