CAIE A-Level Economics 1.2.4 Time periods

Practise choosing the relevant production time period when firms alter fixed factors, capacity, workforce or technology.

Exam points

distinguish short run and long run by whether all factors can be varied
link new technology to the very long run rather than ordinary capacity changes
interpret firm scenarios involving capital equipment, factories and labour

[Maximum number: 1]

To increase production, a firm in industry X needs to install capital equipment, while a firm in industry Y needs to research and introduce a new technology.

What time periods are illustrated by these cases?

industry X

industry Y

short run

long run

very long run

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1.2.4—Time periods question 1