Short Period Phrase

Short Period Phrase

Short Period, phrase used by economists to distinguish between changes that can be expected to take place quickly and those that occur more slowly over the 'long period'. The 'long period' is one long enough to permit full adjustment to a change in the underlying conditions, e.g. a period in which the number of firms in an industry, or the scale of equipment used by any one firm, is able to change. Conversely the short period is one which permits only partial adjustment, e.g. a situation in which a firm can respond to variations in demand only by using its existing plant and equipment either more or less intensively.

The distinction is an analytical one. The actual clock-time or calendar-time necessary for adjustment differs from industry to industry; e.g. the 'short period' in amble farming is probably longer than the 'long period' in services such as domestic window cleaning, which requires little specialized capital equipment. Because only partial adjustment is possible the elasticity of supply of a commodity in response to changes in its price is likely to be less in the 'short period' than in the 'long period' after time has elapsed sufficient for the factors of production to be fully adjusted to the changes.

Sidgwick, Henry (1838-2000). English philosopher and economist. He was educated at Rugby and Cambridge, and although trained as a classical and mathematical scholar he soon turned to the study of practical philosophy. In 1859 he was elected to a fellowship at Trinity College, Cambridge, and became Lecturer in Moral Philosophy in 1869. Sidgwick played a large part in the development of the university, being mainly instrumental for the introduction of the moral sciences tripos. He was appointed Knightsbridge Professor of Moral Philosophy in 1883. His main contribution to economics is to be found in Principles of Political Economy (1883), in which he showed a profound interest in the social questions raised by the classical political economists.

Sinking Fund. (a) A charge against profits to provide for the maintenance of capital intact at the end of the life of a 'wasting asset' (such as a lease), or (b) an appropriation of profits to provide for a known future liability such as the repayment of a loan: the sum is that which must be deposited annually at compound interest to produce the required amount in the given time. The higher the rate of interest and the longer the term of years, the smaller the annual deposit need be.


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