That is 'A short period' | Information 2019 - What is it?


  The short period - concept that within a certain period in the future at least one entrance is fixed, while other variables. In economy it expresses idea that the economy behaves in a different way depending on an interval of time, it has to react to certain incentives. The short period doesn't belong to a certain duration of time, and is rather unique for firm, the industry or the economic studied variable. The key principle conducting concept of a short period and the long period - that soon, firms face both variable expenses and the fixed expenses that means that makes, at a salary and the prices isn't present full freedom to reach new balance.

2019 - Short period

Short period, Information - 2019

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DESTRUCTION of 'a short period' | Information 2019 - What is it?


  This restriction differs since the long period which as believe, contains only the fixed expenses. Soon, lease agreements, contracts and agreements on a salary limit ability of firm to adapt production or a salary to support rate of return.

  If the hospital tests below, than the expected requirement in this year, but his all force of employment of doctors, nurses and technicians works according to the contract within a year, the hospital has no choice, except how to swallow of reduction of his profit. Eventually firms in capital-intensive industries, such as oil and mining industry, have time to expand or reduce operations at factories or investment into correspondence to the changing requirement, but soon, they are incapable to benefit by changes of demand with the same degree of flexibility.

Real examples of costs of a short period

  Mining industry and power giants were struck especially difficult with falling of iron ore, coal, copper and other commodity prices, having emphasized their high fixed expenses soon; Glenkor lost 5 billion in 2015 while the Valley lost 12 billion, and Rio, Tinto lost 866 million. Despite lower prices, these firms continue to increase production because of new investments, especially in areas, such as Brazil and Australia made when the commodity prices were much higher approximately in 2011. For example, Glenkor bought Xstrata in 2013 for 30 billion in the agreement in which he got the majority of the assets of mining industry which considerably depreciated.

  In the analysis of a short period against the remote expenses it is important to understand behavior of firms. In certain situations can be preferable to continue to operate unprofitable firm on a short period if it helps to compensate expenses which are established partially. Eventually, however, expensive firm will be able to finish the lease agreements and agreements on a salary and to close operations.


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