Time Period

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    An economist must distinguish between the sort-run and long-run because a change in a variable can have different effects depending on the time period.

    The short-run is that period of time in which at least one factor of production is fixed (usually land and/or capital). Additional units of variable factors of production (raw materials and labour) must be added to the fixed factor of production to increase output.

    All the factors of production are variable in the long-run. All inputs can be varied to increase output.

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