Production and cost — Economics STD 11 Commerce — Question

A short period refers to the period of time in which a firm cannot change some of its factors like plant, machinery, building, etc. due to insufficiency of time but can change any variable factor like labour, raw material, etc.

Meaning

A long period, on the other hand, is a time period during which a firm can change all factors of production including machines, building, organization etc.

2.

Output can only be increased by changing the quantity of variable factors.

Output

Output can be increased by making changes in the quantity of both fixed as well as the variable factor inputs.

Factors of production here can be grouped in two categories:

* Fixed Factors

* Variable Factors

Classification

In the long period, the distinction between the fixed and the variable factors disappear.

Demand here plays a dominant role in the determination of price of a commodity

Effects

In the long period, supply can be adjusted to any change in demand. So, demand and supply play equal role in price determination.