Differences of Production in the Short Run and Long Run at a Company.

As we know that every Firm’s Goal is to maximize profit or even bought their aim to the maximize profits. It can be decided by 2 times of frames: Short Run & Long Run. This is important to maintain and generate their company.

In a short run, company must remain the production fixed and can’t be changes. Their aim is to decide how many output to produce.100? 1000? Besides that, short-run decisions are also easily to reverse. There is Short-Run Production Relationship that showing different kind of output earns

·         Total product- Total output of a worker produced

·         Marginal Product- Additional of total output after adding a worker

·         Average Product- Average amount produced by each worker

In other way, a long run decisions give company a long time enough to change all production. Next, it decides what size and type to build. How big and what type? Decisions are not easily to be reversed. Moreover there are also the law of Returns to Scale. The meaning is the percentages changes lead to the percentages changes to output by knowing the firms output receives.

·         Increasing return to scale- A changes in input, give a big changes in output

·         Constant return to scale- A changes in input, give a small changes in output

·         Decreasing return to scale- A changes in input, give a constant changes in output