The differences between the short run and the long run in macroeconomics .

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Answer 1

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

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Consider a firm facing conventional production technology. The short run Production Function has a small range of increasing marginal product (increasing marginal returns) and then is subject to the Law of Diminishing Marginal Product (diminishing marginal returns). A. Putting quantity on the horizontal axis and dollars on the vertical axis, depict three important curves: Fixed Cost (FC), Variable Cost (VC), and Total Cost (TC). (Note that we are not asking you to depict average cost functions!) B. Please clearly indicate on this graph the range of quantities where the firm is experiencing (1) increasing marginal product and (2) diminishing marginal product. C. In a few sentences, please justify why you've made this specific classification of increasing/diminishing marginal product in part (b).

Answer 2

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

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Answer 3

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

Answer 6

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

Answer 7

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Answer 8

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.