Why do decisions differ for a firm in the short run versus the long run?

Question

Why do decisions differ for a firm in the short run versus the long run?

Answer 1

because in the short-run, there are fixed cost and in the long-run, all cost are variable cost.

Answer 2

In the short run, fixed costs are sunk, so they cannot do anything to avoid them, so they will continue to produce as long as price is higher than average variable cost.  In the long run, all costs are variable, so they have more control over their costs.  Therefore, they will not produce if price is less than average total cost.

Also, in the short run, capital is fixed, but in the long run it is flexible.  This means that in the long run, the firm can change its production decisions so that it is at the bottom of its long run average total cost curve.