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ERIC Number: EJ775129
Record Type: Journal
Publication Date: 2007
Pages: 6
Abstractor: Author
Reference Count: 7
ISSN: ISSN-0022-0485
The Short-Run Expansion Path for the Firm
Jones, Clifton T.; Thompson, Mark A.
Journal of Economic Education, v38 n3 p325-330 Sum 2007
There is some confusion about the nature of the short-run expansion path (SREP) for the firm as presented in many intermediate microeconomics textbooks. The traditional view is that the SREP is a horizontal line because the firm is stuck with a fixed amount of capital. However, this view does not usually acknowledge that the firm could choose to idle some of its capital when seeking to reduce its output in the short run. The authors show that the traditional horizontal SREP is not invalidated when they explicitly allow for such capital reductions; in fact, it is the optimal path for the firm in the short run. (Contains 2 figures and 2 notes.)
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A