The difference between short-run and long-run costs
In the short run, at least one input — like a factory — stays fixed, so some costs cannot change. In the long run, a firm can adjust every input, making all costs variable.
Formula
Short run: TC = FC + VC | Long run: all costs variable
Real World
Wetherspoons is locked into 20-year pub leases (a fixed cost it cannot escape in the short run), but over the long run it can choose not to renew leases, redesign its estate, and alter every cost it faces.
Exam Focus
Define the short run and long run in terms of fixed factors, not calendar time — a common misunderstanding that examiners penalise.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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