<Li> continue producing if average variable cost is less than price per unit, even if average total cost is greater than price; </Li> <Li> shut down if average variable cost is greater than price at each level of outputs </Li> <P> The transition from the short run to the long run may be done by considering some short - run equilibrium that is also a long - run equilibrium as to supply and demand, then comparing that state against a new short - run and long - run equilibrium state from a change that disturbs equilibrium, say in the sales - tax rate, tracing out the short - run adjustment first, then the long - run adjustment . Each is an example of comparative statics . Alfred Marshall (1890) pioneered in comparative - static period analysis . He distinguished between the temporary or market period (with output fixed), the short period, and the long period . "Classic" contemporary graphical and formal treatments include those of Jacob Viner (1931), John Hicks (1939), and Paul Samuelson (1947). The law is related to a positive slope of the short - run marginal - cost curve . </P> <P> The usage of long run and short run in macroeconomics differs somewhat from the above microeconomic usage . John Maynard Keynes in 1936 emphasized fundamental factors of a market economy that might result in prolonged periods away from full - employment . In later macroeconomic usage, the long run is the period in which the price level for the overall economy is completely flexible as to shifts in aggregate demand and aggregate supply . In addition there is full mobility of labor and capital between sectors of the economy and full capital mobility between nations . In the short run none of these conditions need fully hold . The price level is sticky or fixed in response to changes in aggregate demand or supply, capital is not fully mobile between sectors, and capital is not fully mobile across countries due to interest rate differences among countries and fixed exchange rates . </P>

The short run is a period of time