Let $z_a$ and $z_b$ are two vectors of inputs. $z_a$ is variable in both long run and short run however $z_b$ is only variable in long run.

Now let's suppose that the price of one of the inputs in vector $z_a$ increases (let's say $z_a^i$), how would that effect the marginal cost in the long and short run? Can we compare the long run and short run marginal cost because of this price change?

I understand the relationship of long run and short run costs and marginal costs, however I am finding a hard time understanding these price change effects. Any help is appreciated.


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.