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This is related to economics and from concepts of short run and long run?My question is...

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studentdivers... | Student | Honors

Posted January 4, 2011 at 4:50 AM via web

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This is related to economics and from concepts of short run and long run?

My question is how managers follow concepts of short run and long run in their planing cycle. I would like to have explanation of this concepts from any industry point of view like automobile industry/textile industry/food industry?

Many thanks in advance

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dbello | High School Teacher | (Level 1) Educator

Posted January 11, 2011 at 12:48 PM (Answer #1)

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Businesses are in business to make a profit. Therefore if a business faces a choice on production alternatives it will choose the one it thinks will yield the greatest profit. To maximize profit businesses must analyze their capacity to produce. This is accomplished two ways: The short run refers to the capacity produced utilizing the existing equipment it already has available to them. The long run refers to variables in the factors of production, such as labor and machinery. For example, the potential increase in profits by adding more labor or machinery to the production process.  Before any manager makes a decision regarding the profit value in a short or long run they would be involved in research, consultants, and field experts all of which play a significant role in the process.

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