Short Run and Long Run
The phrases, short run and long run are used frequently in economics. The major difference between the economic short run and long run is, the flexibility afforded to decision makers.
The short run refers to the time period for which the commitments that a firm has made are binding.
The long run, on the other hand, refers to the time period in which most (if not all) of the firm’s commitments can be changed.
Therefore, a firm which has conducted its ‘efficiency of production’ tests and wishes to alter its means of production would have limited opportunity to change these processes in the short run due to binding commitments. Instead, these changes can be made in the long run.