Final answer:
The short run is defined as a period where at least one factor of production is fixed, resulting in both fixed and variable costs for a firm.
Step-by-step explanation:
The short run in economic terms is a period during which at least some factors of production are fixed. This means there are certain inputs into the production process that cannot be changed. In this context, costs are divided into fixed costs and variable costs. Fixed costs are those that do not change with the level of output. These could include rent, salaries, or the cost of machinery that must be paid regardless of how much is produced.
Conversely, variable costs are those that fluctuate based on the level of production, such as raw materials and hourly wages for additional labor. Therefore, the statement that the short run is a period when there are only cash costs is incorrect. Instead, it is more accurate to say that the short run is a period when there are both fixed and variable costs, with at least one input remaining unchanged.