A difference between the short run and the long run is that a firm in the short run faces an unconstrained cost minimization problem in both the short run and the long run.

Question

Quizplus · Accepted Answer

In the short run, a firm faces some fixed costs which cannot be avoided, and therefore faces a constrained cost minimization problem. In the long run, all costs are variable and a firm can choose its inputs to minimize costs without any constraints.

A Difference Between the Short Run and the Long Run