When a firm operates in the short run, its cost of production may not be minimized because of inflexibility in the use of capital inputs Output is initially at level q1. In the short run, output q2 can be produced only by increasing labor from Lito L3 because capital is fixed at K1 the long run, the same output can be produced more cheaply by increasing labor from L1 to L2 and capital from K1 to K2.