The Short Run and the Long Run in Economics

The Short Run and the Long Run in Economics In economics, its extremely important to understand the distinction between the short run and the long run. As it turns out, the definition of these terms depends on whether they are being used in a microeconomic or macroeconomic context. There are even different ways of thinking about the microeconomic distinction between the short run and the long run. Production Decisions The long run is defined as the time horizon needed for a producer to have flexibility over all relevant production decisions. Most businesses make decisions not only about how many workers to employ at any given point in time (i.e. the amount of labor)  but also about what scale of an operation (i.e. size of factory, office, etc.) to put together and what production processes to use. Therefore, the long run is defined as the time horizon necessary not only to change the number of workers but also to scale the size of the factory up or down and alter production processes as desired. In contrast, economists often  define the short run as the time horizon over which the scale of an operation is fixed and the only available business decision is the number of workers to employ. (Technically, the short run could also represent a situation where the amount of labor is fixed and the amount of capital is variable, but this is fairly uncommon.)  The logic is that even taking various labor laws as a given, its usually easier to hire and fire workers than it is to significantly change a major production process or move to a new factory or office. (One reason for this likely has to do with long-term leases and such.) As such, the short run and the long run with respect to production decisions can be summarized as follows:   Short run: Quantity of labor is variable but the quantity of capital and production processes are fixed (i.e. taken as a given).Long run: Quantity of labor, the quantity of capital, and production processes are all variable (i.e. changeable). Measuring Costs The long run is sometimes defined as the time horizon over which there are no sunk fixed costs. In general, fixed costs are those that dont change as production quantity changes. In addition, sunk costs are those that cant be recovered after they are paid. A lease on a corporate headquarters, for example, would be a sunk cost if the business has to sign a lease for the office space. Furthermore, it would be a fixed cost because, after the scale of the operation is decided on, its not as though the company will need some incremental additional unit of headquarters for each additional unit of output it produces. Obviously the company would need a larger headquarters if it decided to make a significant expansion, but this scenario refers to the long-run decision of choosing a scale of production. There are no truly fixed costs in the long run since the firm is free to choose the scale of operation that determines the level at which the costs are fixed. In addition, there are no sunk costs in the long run, since the company has the option of not doing business at all and incurring a cost of zero. In summary, the short run and the long run in terms of cost can be summarized as follows:   Short run: Fixed costs are already paid and are unrecoverable (i.e. sunk).Long run: Fixed costs have yet to be decided on and paid, and thus are not truly fixed. The two definitions of the short run and the long run are really just two ways of saying the same thing since a firm doesnt incur any fixed costs until it chooses a quantity of capital (i.e. scale of production) and a production process. Market Entry and Exit Economists differentiate between the short run and the long run with regard to market dynamics as follows: Short run: The number of firms in an industry is fixed (even though firms can shut down and produce a quantity of zero).Long run: The number of firms in an industry is variable since firms can enter and exit the marketplace. Microeconomic Implications The distinction between the short run and the long run has a number of implications for differences in market behavior, which can be summarized as follows: The Short Run: Firms will produce if the market price at least covers variable costs, since fixed costs have already been paid and, as such, dont enter the decision-making process.Firms profits can be positive, negative, or zero. The Long Run: Firms will enter a market if the market price is high enough to result in positive profit.Firms will exit a market if the market price is low enough to result in negative profit.If all firms have the same costs, firm profits will be zero in the long run in a competitive market. (Those firms that have lower costs can maintain positive profit even in the long run.) Macroeconomic Implications In macroeconomics, the short run is generally defined as the time horizon over which the wages and prices of other inputs to production are sticky, or inflexible, and the long run is defined as the period of time over which these input prices have time to adjust. The reasoning is that output prices (i.e. prices of products sold to consumers) are more flexible than input prices (i.e. prices of materials used to make more products) because the latter is more constrained by long-term contracts and social factors and such. In particular, wages are thought to be especially sticky in a downward direction since workers tend to get upset when an employer tries to reduce compensation, even when the economy overall is experiencing a downturn. The distinction between the short run and the long run in macroeconomics is important because many macroeconomic models conclude that the tools of monetary and fiscal policy have real effects on the economy (i.e. affect production and employment) only in the short run and, in the long run, only affect nominal variables such as prices and nominal interest rates and have no effect on real economic quantities.

System Board essays

System Board essays The system board is the heart and brain of a computer. If you are building your own computer then the most important thing to decide is what kind of system board you want or need. If you already have your computer case and power supply and dont plan on buying a new case or power supply you need to be sure that the new system board will be compatible with these two things. There are two main specifications readily available. The first is Baby AT Form Factor and is found in older computers so you will probably be going will the newer form factor, which is ATX. Be sure that you buy a system board with a processor socket that is compatible with the CPU that you are planning on using. Many boards already come as a package deal with the processor included but also be sure that it will allow for future upgrades. This will prolong the life of the system board. You also need to be sure that the chipset is compatible with the CPU that you plan on using. If not there may be problem with the way your computer handles data or it might not boot up at all. You should buy a system board that has at least 512k of cache memory installed. This memory is used to speed up the transfer of data by storing data that the computer has recently used. Cache memory is faster and more expensive than main memory. When deciding what system board to buy you also need to consider how fast your selected memory will be. You should buy a board with a memory bus that will support the speed of your memory. If it will not then you are wasting your money buying faster memory. The system bus is also a very important part of the system board that will ultimately affect your computer speed if you dont buy a board that supports at least 100 and 133MHZ. But if you want to be sure that you have the latest and the greatest you need to buy a board that supports bus speeds starting at 400MHZ. Finally you need to verify that the BIOS is compatible with all the compon...

Tourism, Leisure and Event Management in the World of Soft Systems Term Paper

Tourism, Leisure and Event Management in the World of Soft Systems - Term Paper Example In the second phase you will work with collaborative group of colleagues to bring together your very different views and perspectives, and will need to enter a research cycle in which you shape and refine your mutual understandings, and select a client and project for investigation, supported and approved by your Tutor. You will undertake a ‘mini’ research project leading to the development of a presentation through which you enable your selected client or stakeholders to understand on their own terms ‘that which is obvious’, keeping in mind that the SSM process is about a process through which the client comes to understand for themselves ‘that which is obviouse’. When the client (or other stakeholders) view the work generated by the project, it should be clear to them ‘what needs to be done’. Whilst there is scope for creativity and imagination, the Overall Aim: To analyse, through Systems thinking, a real Hospitality, Tourism and Event environment, evaluate issues arising from the organization of systems and structures, and appreciate the complexities and interrelatedness of real human situations. This includes the development of appropriate tools and the presentation of findings in a way which recognizes the needs of the client, and through the broad application of systems thinking, and soft systems tools and methods. You should draw on learning from other courses, as appropriate, including MVS and OMTL. Task 1 Requirements: Preliminary Workbook (Individual) Weighting 30% For this first part of this study you will need to prepare the ground for assignment to your project group by conducting your own initial desk research enquiry in tandem with your final semester project. Following Soft Systems Methodology you will analyse your experience using the workbook provided (six diagrams), and including a written evaluation (one A4 sheet, 750 words) of issues relevant to the project based on business, location, an d/or online and social media analysis. The workbook may be competed manually or electronically. The grading for each section will reflect: Depth of insight/development, use of systems concepts and conventions, content Deadline TBC , 3:00 PM Student Name: ___________________________________________________ Student Score: / Student grade: / 10 Part A (40 Marks) 1a) Use a Rich Picture to represent the component parts and dynamics of the situation that you perceive as the basis of your final semester research paper. Your diagram must be appropriately labelled and follow the conventions for systems diagrams (20 Marks) 1b) Use any other formal diagram of your choice to represent the component parts and dynamics of the situation that you perceive as the basis of your final semester research paper. Your diagram must be appropriately labeled) and follow the conventions for systems diagrams (20 Marks) 2a) Complete the following grid for five possible (basic) root definitions for a ‘rele vant system’ from which you might ‘derive learning’ about your research context: (pass/fail) What is to be done by the system (P) By what means or approach the system is to do P (Q) The greater purpose to be achieved by the system (R) 1. Provide employment for local citizens