Short+Run

__Short Run__

The Short Run period of time when a factor is fixed meaning that it cannot be altered. As long as you have any kind of factor that is fixed you are in the short run. An example of short run would be our desk demonstration. There was one desk, one pair of scissors, and paper. We could not add any more scissors or another desk to the equation. The fixed cost was the amount of money we had to pay in order to rent the desk and buy the scissors. No matter how many people we had in the work space we had to pay the same amount for those costs. So we had three people trying to make the econ day cards but were not very efficient. They kept ending up with two or three cards. It also can be referred as the period too brief for a firm to alter its plant capacity, yet long enough to permit a change in the degree to which the fixed plant is used. All of the other factors can be changed. We try to get to the Long Run but we have to go through the short run in order to get to there.

__Short Run Graph__



media type="youtube" key="c2JG0x0n304" height="344" width="425" This is an example of short run. They have tons of workers but have the one oven.

Websites: http://en.wikipedia.org/wiki/Short-run http://www.theshortrun.com/classroom/glossary/micro/costprofit.html#The%20Short%20Run http://en.wikipedia.org/wiki/Short-run

Question: In the short run, a profit maximizing firm will do what?

Answer: Increase production if marginal cost is less than the price Decrease production if marginal cost is greater than price Continue producing if average variable cost is less than price even if average variable cost is greater than price Shut down if average variable cost is greater than price. Then the average variable cost is the largest loss a firm can occur in the short run.