An 8 Slide presentation on the Time Period Concept.

1. Managerial Economics
An 8 slide presentation on Time Perspective
- Jerrin Tom Mathews

2. Time Perspective/ period, in economics expresses the concept that an
economy behaves differently depending on the length of time it has to
react to certain stimuli.
Key terms
Variable Input/ factors – is a resource that can be changed in the short run. Are factors of
production that change with output.
Fixed input/ factors – is a resource that can not be changed in short run. Are factors that
do not change with output.
TIME PERSPECTIVE/PERIOD

3. "The short run is a period of time in which the quantity of at least one input is fixed and
the quantities of the other inputs can be varied”. New firms do not enter the industry,
and existing firms do not exit.
Resources needed
• Raw materials like lumber
• Labour
• Machinery
• Factory
Variable inputs
• Lumber
• Labour
Fixed inputs
• Machinery
• Factory
Example – Cricket Bat manufacturer
SHORT RUN

4. "A period of time in which all factors of production and costs are variable. There are no
fixed factors in the long run” New firms can enter the industry, and existing firms can
exit.
Resources needed
• Raw materials like lumber
• Labour
• Machinery
• Factory
Variable inputs
• Lumber
• Labour
• Machinery
• Factory
Fixed inputs
(Nil)
Example – Cricket Bat manufacturer
LONG RUN

5. Market period
Very short time
period, absolutely
no change
supply, but
demand can
increase or
decrease.
Short period
Longer than
market period,
variable factors
can be changed
while the fixed
factors remain
constant.
Long period
Longer than
short period,
fixed factors and
variable factors
can be changed.
PERIOD OF TIME
(According to Alfred Marshall)

6. Market Period
• Supply being fixed during the
market period, the equilibrium
price (the market period price)
tends to be solely governed by
the changes in the demand
condition.
• As the price increases and
decreases the demand so
increases and decreases.
• The supply remains the same

7. Short Period
• Period during which the size of the firm and
scale of production remains unchanged. The
stock of given commodity can only be increased
to a limited extent.
• Supply curve is relatively inelastic.
• Price is determined by interaction of forces of
demand and supply.

8. Long Period
• Long run period is the during which
firms can change its size and scale
of production.
• Supply curve is relatively elastic
• Supply curve is flatter than short
period.

9. OTHER CONCEPTS RELATED TO SHORT & LONG RUN
Short Run Demand – is the demand that is an immediate reaction to price
changes and income fluctuation.
Long Run Demand – is the demand which will ultimately exist as a result of price
changes, product promotion, product improvement, after enough time is
allowed.
Short Run Cost – have fixed factors and variables that impact production.
Long Run Cost – have no fixed factors of production.

10. Thank You!