Microeconomics: Short Run and Long Run Concepts

These flashcards cover essential concepts related to the short run and long run in microeconomics, including definitions of costs and profits.

Short Run

A period too brief for a firm to alter its plant capacity, allowing for changes in the degree of current capacity utilization.

Long Run

A period long enough for a firm to adjust the quantities of all resources it employs, including plant capacity.

Fixed Plant

The condition in the short run where a firm's plant capacity remains unchanged.

Variable Plant

The condition in the long run where a firm's plant capacity can be adjusted.

Explicit Costs

Money payments a firm makes to outside suppliers of resources.

Implicit Costs

Opportunity costs associated with a firm's use of resources it already owns.

Normal Profit

The typical amount of accounting profit an entrepreneur would expect to earn in alternative business ventures, regarded as an implicit cost.

Accounting Profit

Total revenue minus explicit costs.