Remember from the section on production costs that the short run is a time period during which at least one factor of production cannot be changed. In the context of perfect competition this meaning still holds. In addition, it will be a time period too short for firms to enter or leave the industry.
Even though it seems that we are using the same terminology
in two different ways, we aren't. Since the short run doesn't give a firm time enough to change all its factors of
production, it makes sense that it also doesn't give a firm time
enough to open a new business, which naturally would require that
it have time to change all its factors.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved