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However, there is no hard and fast definition as to what is classified as "long" or "short" and mostly relies on the economic perspective being taken. Marshall's original introduction of long-run and short-run economics reflected the 'long-period method' that was a common analysis used by classical political economists.
Macroeconomics is traditionally divided into topics along different time frames: the analysis of short-term fluctuations over the business cycle, the determination of structural levels of variables like inflation and unemployment in the medium (i.e. unaffected by short-term deviations) term, and the study of long-term economic growth.
The total cost curve, if non-linear, can represent increasing and diminishing marginal returns.. The short-run total cost (SRTC) and long-run total cost (LRTC) curves are increasing in the quantity of output produced because producing more output requires more labor usage in both the short and long runs, and because in the long run producing more output involves using more of the physical ...
A long-run average cost curve is typically downward sloping at relatively low levels of output, and upward or downward sloping at relatively high levels of output. Most commonly, the long-run average cost curve is U-shaped, by definition reflecting economies of scale where negatively sloped and diseconomies of scale where positively sloped.
The principal difference between short run and long run profit maximization is that in the long run the quantities of all inputs, including physical capital, are choice variables, while in the short run the amount of capital is predetermined by past investment decisions. In either case, there are inputs of labor and raw materials.
In economics, the "J curve" is the time path of a country’s trade balance following a devaluation or depreciation of its currency, under a certain set of assumptions. A devalued currency means imports are more expensive, and on the assumption that the volumes of imports and exports change little at first, this causes a fall in the current ...
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Short-run and long-run analyses; Sticky versus flexible wages and prices; Determinants of aggregate supply; Macroeconomic Equilibrium. Real output and price level; Short and long run; Actual versus full-employment output; Economic fluctuations; Fiscal Policy Expansionary and contractionary; Lag time; Automatic stabilizers