If a business is making losses in the short run, it will either keep limping along or just shut down, depending on whether its revenues are covering its variable costs. Losses are the black thundercloud that causes businesses to flee. When new firms come into an industry in response to high profits, it is called entry. If a business is making a profit in the short run, it has an incentive to expand existing factories or to build new ones. In a competitive market, profits are a red cape that incites businesses to charge. The distinction between the short run and the long run is therefore more technical: in the short run, firms cannot change the usage of fixed inputs, while in the long run, the firm can adjust all factors of production.
It varies by industry and by specific business within an industry.
The line between the short run and the long run cannot be defined precisely with a stopwatch, or even with a calendar.
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