Like normally how long can be said as long run? And does specific time length of these words matters?


1 Answer 1


The actual length of time does not matter. Simply, in the short-run capital is fixed and labor is variable. In the long-run both capital and labor are variable (which gives firms enough time to, for example, build a new factory to match an increase in demand). It would be really fortunate if there was a general time frame, but that would vary from industry to industry. The long-run for, let say, Ford is a pretty long-time because they are very capital intensive. However the long-run for, lets say, a Clown Rental Service, is very short because it is entirely labor dependent.

Hopefully this answer helps.

  • $\begingroup$ Thanks a lot for the explanation! I also just read about a definition saying that normally in a short-term we assume that at least one input is fixed, from the Advanced Microeconomic Theory by Jehle and Reny. $\endgroup$
    – Eric Chen
    Commented Oct 16, 2016 at 4:49
  • $\begingroup$ Ya, that would be tue slightly more general definition. But the sr case where labor is fixed and capital varies is a rare, odd case $\endgroup$
    – bdempe
    Commented Oct 16, 2016 at 5:12

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.