Hence the short run is that period for which stocks are constant, the long run that period where price is determined by the costs of production (but factors are constant) and the very long run that period where all factors vary.
we shall find that if the period is short, the supply is limited to the stores which happen to be at hand; if the period is long, the supply will be influenced, more or less, by the cost of producing the commodity in question; and if the period is very long, this cost will in its turn be influenced, more or less, by the cost of producing the labour and material things required for producing the commodity.
KeywordsExpectations Imperfect competition IS–LM Long run and short run Market period New classic macroeconomics Perfect foresight Perfect markets Rational expectations Temporary equilibria
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