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Essay / Research Paper Abstract
This 5-page paper discusses the similarities and differences between short-term (short-run) theory production and costs and long-term (long-run) theory production and costs. Bibliography lists 4 sources.
Page Count:
5 pages (~225 words per page)
File: AS43_MTprodecon.rtf
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Unformatted sample text from the term paper:
that an individual (or other entity) with a scarce amount of resources with which to fulfill his needs will make choices as to what good (or service) will best fulfill
that need (Economics Basics: Introduction, 2009). Economics is the science of what will motivate individuals (and nations), and how theyll behave in response to certain material constraints (Economics Basics: Introduction,
2009). But economics doesnt concern only individuals - how firms behave in relationship to certain objectives and material constraints tends to
be endlessly fascinating to economists. Part of economics is examining costs and production of a firm - a firms objective is to
maximize profits, which are defined as total revenue less total costs (Basic Economics, 2009). Meanwhile, total revenue equals price x quantity sold; while total costs is the sum of all
opportunity costs related to the production process (Basic Economics, 2009). Finally, we define opportunity costs as explicit costs (wages, cost of raw materials and taxes) and implicit costs (value of
time of the owner and interest rate forgone) (Basic Economics, 2009). Weve been asked here to compare and contrast "production and
cost in the short term" versus "production and cost in the long term." The short-term, also know as the short-run, is the period of time during which at least one
factor of production is considered to be fixed, in other words, it cant be changed (Riley, 2006). Most of the time, short run involves capital input (such as plants and
machinery) and land (Riley, 2006). If we apply the law of diminishing returns to the short run, we notice that as we add more units of a variable input (such
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