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-cudn't find the thread for long and short run ???? where is that section??

Distinction between short-run and long-run

Economic models usually begin with a statement about their assumptions. One of the assumptions is usually concerned with the time period involved. We always need to know if a model is a short-run or a long-run model. What economists mean by time period is not the same as a physicist or mathematician. Time periods in economics are not measured with a stop-watch in minutes, hours or days. Rather, the short-run and long-run are more like philosophical concepts.


The short-run

In economics the short run is defined as a period of time when at least one of the four factors of production is fixed in supply. Remember that the four factors are, land, labour, capita and entrepreneurship.



The law of diminishing returns is one economic model that is a short-run concept. When textbooks construct examples of this model the authors usually describe land as the fixed factor. A farmer can more easily and quickly change the amounts of labour, or capital than he can buy a new piece of land. However, any other factor could be used as the fixed factor.



Thus in the above example the short-run becomes the length of time that it takes for a farmer to buy a new land. Authors almost never use entrepreneurship as an example of the fixed factor because, as we have said earlier, it is a particularly difficult factor to quantify.



Another way of expressing the short-run is to say that it is the period of time when a new firm cannot enter a market. Because a new firm would have to change one or more of its factors of production to compete in the market, this is identical to our earlier statement.



The long-run

The long-run is therefore the period of time when all factors of production are variable in supply.



The definitions are both elegant and frustrating. The time to construct a new football stadium can be measured in years. It takes an age to get planning permission, to clear a site and to build new stands. Here a new entrant into the football market might take two or three years. The short ñrun is then up to three years and the long-run over-three years.

Yet with a fruit stall in a market it might take only a day or so to buy the stall and the fruit. Here the long-run is anything over a day. But even then we are not able to say with any precision how long the short run for football stadia or fruit stalls is, the next stadium will almost certainly take a different length of time to construct than the last one. The long-run can therefore also be said to be the time taken for a new entrant to come into the market.



The short-run and the long-run are important concepts in economics and high-school students and undergraduates deal with them frequently. Elasticity varies greatly with time ñ so that any economic model with a demand or supply curve needs to have a stated time period. Short run and long run costs are two very different concepts. The economic models of perfect competition, monopolistic competition, oligopoly and monopoly all need the student to have a firm grasp of the definitions of short and long run.

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@Playing

Pardon for the late post, actually, i don't know how did i miss this post.



Regards,

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excellent job qurrat. i have a question but i requires quick response.
what is Trickle Down Effect and how it can impacts the economy of Pakistan?

plzzz let me know if u have any information abt this.

regards

Nedian

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thank you ,,

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______________Exile From Heaven_______________

Thnx a lot.

Trickle down effect is actually a marketing phenomenon, according to which the product is initially marketed in a way that only elite class can have it, but laterly prices are brought down. You may have example of 'surf excell' in Pakistan and India. When it was launched the commercial used to represent ladies of elite class, and was presented in a way that common man cannot have it, but laterly it's price was brought down for general public.


Hope my explanation may solve your problem.


Regards,

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Ms Quratullain: the above marketing phenomenon you xplaind is called
" price skiming technique". and this technique is used for higly inovative products.i guess not for surf excel ... i guess the local xample for the price skiming would be of Mobilink, it was first Gsm cellular company in pakistan who were charging 10000 or 15000 each sim initially,
(price skiming=getting the big Chunks of market share) and now you can have any sim at Rs.150 or so.... chadoo iss topic k0

well you very well xplained the cost theory, thats very helpful. i just want you to depict the other side of the cost.i.e Production....
and one more thing if you can post precisel;y about " market structure" i.e( perfect competition, monoply, monoplistic competition,oligoply)...... long and short Run of each market...level of out and price determination in each market structure ..... the 4p's(product,price,place,promotion) strategy in each structure....(if you could write it in your own words,that wud be much better)
i have to take Mangerial Economics paper on 8th of Jan. your these posts (above mentioned) will complete almost 80% of the course....
Great Job Qurrat (two thumbs up for you)
thank you very much, shukriya,dera mehrabanii

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@PlayinG

Dear playing,

I carefully had a look at my post again and found the explanation quite exact. Let me clear you what is price skimming actually.

First of all price skimming is not a marketing strategy, it’s a pricing strategy. And I think you better know the difference between the two.

Secondly as you’ve mentioned that it’s for highly innovative products, right, and let me tell you that trickle down effect is a marketing phenomenon which effects the consumer goods like surf excel. And yes, the example of mobilink you've quoted can't fit in "Trickle down effect' coz it doesn't provide 'consumer good'. the cellular service is not a consumer good instead it's a sort of luxurious item.

And the trickle down effect aims to have expansion in market, while price skimming aims to cover the 'development cost' or 'sunk costs'.

Trickle down effect is a marketting strategy, which one firm uses in the presence of competetors, while price skimming is possible only in the absence of competetors first and then step by step entry of further competetors in the market.


I think my explanation above has clearly differenciated between trickle down effect and price skimming, and now you’ll surely have good time with your paper. And yes, you can verify my say from your university professors and from different authentic web resources and online teachers.

Regarding your notes for ‘Market structure’, I’ll upload same with in a day.



Regards,

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i didn't say its marketing strategy,,i said its TECHNIQUE.(used in pricing strategy)

The trickle-down effect is a marketing phenomenon that affects many consumer goods, including new technology and fashion. Initially a product may be so expensive that only wealthy people can afford it. Over time, however, the price will fall until it is available to the general public

Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.

well i had a problem with your example, i thought it wasn't up to the mark. according to this statament ur xample is RiGHT.

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______________Exile From Heaven_______________

@PlayinG

Good conclusion

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