Economists have broadly classified time horizon into three periods. Use diagrams to explain supply behaviour during very short, short and long period?
1. Very short period: This is a period in which production cannot be changed at all, therefore supply can be increased upto the present stock.
2. Short period: In this period output can be increased with the greater implication of variable factor, fixed factor cannot be changed, supply can respond to change in price but only to limited access.
3. Long period: In this period production can be increased with the greater application of all the factors of production, accordingly supply becomes more responsive to change in price level.
2. Short period: In this period output can be increased with the greater implication of variable factor, fixed factor cannot be changed, supply can respond to change in price but only to limited access.
3. Long period: In this period production can be increased with the greater application of all the factors of production, accordingly supply becomes more responsive to change in price level.