Fixed factor in the short run

Reference no: EM1374560

In the economic theory of the company, we generally discuss only 2-factors, labor and capital, and in short run labor is variable factor and capital is the fixed factor of production. The long run is a period of time that is long enough for all factors of production to be changed. It is not measured by the number of calendar days, but in how long it takes to change the quantity of capital used by a firm. Think of the length of time to enter an industry, for example.
(A) Briefly explain why capital is the fixed factor in the short run, and not labor. (B) Then describe (1) a business or industry where the long run is a relatively short or brief period of time and (2) another business or industry where the long run is a relatively long period of time.

Reference no: EM1374560

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