Decision time frames

Short run
In long run, firm can Increase output by changing variable factors such as labour. But, some production factors including size of the plant, the size/number of plants, the technology used, equipment and the management organization cannot be changed

Long run
In the long run, firm has sufficient time to adjust any and all production factors, e.g. expanding/shrinking/demolishing/building factories or leaving/entering an industry.

My tips:

• Differences in short run and long run are critical to the concept of economic profit.