Short run

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Definition

The short run refers to a short timeframe during which firms cannot significantly reorganized their production and alter their fixed costs. Thus, one or more of the inputs to production remain unchanged, making them less capable of optimizing the use of factors of production. This is in contrast with the long run.

Unanticipated shifts in the economy, in the short run, lead to a deviation from full employment. In the long run, there is a tendency to revert towards full employment.