#2.5 The Importance of Time Periods

In the short run, only some factors of production can be changed.

In the short run, all factors of production are variable.

Labour is typically the factor that can be changed in the short run.

In the short run, firms can easily build new factories and expand capital resources.

The long run is a time period where all factors of production can be changed.

A firm constructing a new factory to expand its production capacity is an example of a short-run decision.

The very long run is a period where only labor can be changed.

Technological advancements can be considered a variable factor in the very long run.

Government regulations remain constant in the very long run.

Economists use different time periods to analyze how changes in inputs influence economic outcomes.

The short run and long run have fixed timeframes, such as exactly six months or one year.

In the long run, firms can alter both the quantity and quality of their capital resources.

The distinction between short-run and long-run periods is not important in economic analysis.

Time periods in economics are useful for assessing how changes impact production and investment.

In the very long run, only consumer preferences change while all production factors remain constant.

The long run allows firms to become more efficient by adjusting all their resources.

Time periods in economics have strict definitions that do not change across industries.

Economists use time periods to assess the effects of change over time.

The very long run is characterized by fixed capital resources and technology.

Understanding short-run, long-run, and very long-run periods is essential for analyzing production and investment decisions.