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INCOME ELASTICITY OF DEMAND: The relative response of a change in demand to a relative change in income. More specifically the income elasticity of demand can be defined as the percentage change in demand due to a percentage change in buyers' income. The income elasticity of demand quantitatively identifies the theoretical relationship between income and demand.

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VERY LONG RUN, MICROECONOMICS:

A production time period in which all inputs are variable, including those under control of the firm and those beyond the control of the firm. During the very long run, not only are the labor, capital, land, and entrepreneurship inputs variable, but so too are key production inputs such as government rules, technology, and social customs. This is one of four production time periods used in the study of microeconomics. The other three are short run, long run, and very short run.
The very long run is a production time period that is so long that all productive inputs are variable, including those that are variable in the long run (labor and capital) as well as those that change slowly and/or are beyond the control of the firm. In the very long there are no fixed inputs. Everything affecting production is likely to change. The task facing a firm is then to adjust to all sorts of changes.

Consider a comparison between the long run and the very long run:

  • In the long run, all inputs under the control of the firm or producer are variable. In other words, a firm can change the size of the workforce as well as the plant size and other capital inputs. However, the firm operates under existing government regulations, has access to the same transportation infrastructure, and makes use of the same production technology.

  • In the very long run, technology, social institutions, and other things that may change very slowly and/or may be largely beyond the direct control of the firm can change. A firm not only builds a new plant in the very long run, but this plant makes use of improved technology and is adapted to new government regulations.

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Recommended Citation:

VERY LONG RUN, MICROECONOMICS, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: December 11, 2018].


Check Out These Related Terms...

     | production time periods | short run, microeconomics | long run, microeconomics | very short run, microeconomics | production inputs | fixed input | variable input |


Or For A Little Background...

     | production | production cost | variables | labor | capital | law of supply | economic analysis | marginal analysis | factors of production | microeconomics | market | price | quantity supplied |


And For Further Study...

     | short-run production analysis | long-run production analysis | production function | product | total product | marginal product | average product | law of diminishing marginal returns | marginal returns | production stages | division of labor | production possibilities | economic growth |


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