UNIT 1

Time - Short  run and long run

In short run most firms find it more difficult to change supply quickly, they are directly operating at full capacity so find more FOP will take time e.g. more labour, machinery, capital. However in the long run they can plan expansion and take on more staff and train them to do the job - the supply can change. Therefore in the short run PES tends to be more inelastic, in the long run PES is more elastic. we can employ more FOP and change our supply.