Which of the following would be considered long-run choices? Which are short-run choices?

1. A dentist hires a new part-time dental hygienist.
2. The local oil refinery plans a complete restructuring of its production processes, including relocating the plant.
3. A farmer increases the quantity of water applied to his or her fields.
4. A law partnership signs a 3-year lease for an office complex.
5. The university hires a new football coach on a 3-year contract.

Short run choices:

• A dentist hires a new part-time dental hygienist
• A farmer increases the quantity of water applied to his or her fields

A short term is usually referred to less than 1 years.

These are considered as short run choices because, these decisions are not fixed and may change anytime in the near future (1 year). For example the dentist has hired the hygienist for part time, in the future he may hire someone else as a permanent or a full time hygienist. Similarly a farmer may reduce the quantity of water in his fields anytime as per his needs.

Long run choices:

• The local oil refinery plans a complete restructuring of its production processes, including relocating the plant.
• A law partnership signs a 3-year lease for an office complex.
• The university hires a new football coach on a 3-year contract.

Long term is usually considered greater than 1 years.

These decisions are considered as long term because once implemented, they cannot be reversed easily. For example, once the oil refinery performs the restructuring of the process it will expect to keep the new process for a longer period of time. At restructuring involves both time and money. Similarly, the law partnership lease and new football coach are hired for 3 years.