Final answer:
The 'short run' in economics is a period during which at least one production factor is fixed, such as a business's building lease. Variable inputs can change, but fixed inputs cannot until the business reaches the 'long run,' where all factors of production can be adjusted.
Step-by-step explanation:
The term short run in economics refers to a period of time during which at least one factor of production is fixed and cannot be changed. This concept is important to understand when considering production and operational capacities of a business. For example, when a pizza restaurant is locked into a lease for its current building, it's operating in the short run because it cannot choose to relocate or resize its physical location. The factors that can be changed in the short run are called variable inputs (L), while those that cannot are known as fixed inputs (K).
While there is no strict definition of the exact length of the short run, it is characterized by the constraint that the firm cannot alter the usage of fixed inputs. It varies based on the specific circumstances of each business. In contrast, the long run refers to a period of time when a firm is able to adjust all factors of production, including those that are fixed in the short run.