PRODUCTION AND COSTS

In the short run, some factors of production cannot be changed. If the firm decides to upgrade its technology, construct a new building, or expand its machinery and equipment capacity today, it would take quite some time to realize any of these changes. So, a time frame in which certain inputs cannot be changed is called the short run. These inputs are fixed in the short run and therefore called fixed inputs. The firm, however, can change certain inputs rather quickly—in the short run— and these inputs are called variable inputs.