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  • Final Economics

    Загружено:

    Faizan Fizi
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    The production function relates a firm's output to its inputs, typically capital and labor. In the short run, one input like labor can be varied while other inputs like capital are held fixed. This allows production to increase with the variable input held constant. The law of variable proportions governs short run production. In the long run, all inputs can be varied and there is no fixed output. Both labor and capital can be adjusted as variable inputs.

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    The production function relates a firm's output to its inputs, typically capital and labor. In the short run, one input like labor can be varied while other inputs like capital are held fixed. This allows production to increase with the variable input held constant. The law of variable proportions governs short run production. In the long run, all inputs can be varied and there is no fixed output. Both labor and capital can be adjusted as variable inputs.

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    10 просмотров2 страницы

    Final Economics

    Загружено:

    Faizan Fizi
    The production function relates a firm's output to its inputs, typically capital and labor. In the short run, one input like labor can be varied while other inputs like capital are held fixed. This allows production to increase with the variable input held constant. The law of variable proportions governs short run production. In the long run, all inputs can be varied and there is no fixed output. Both labor and capital can be adjusted as variable inputs.

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    Attribution Non-Commercial (BY-NC)
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    из 2

    Q#1. What is production function? Define in terms of short run & long run.

    Production Function: The production function relates the output of a firm to the amount of inputs, typically capital and labor. It is important to keep in mind that the production function describes technology, not economic behavior. A firm may maximize its profits given its production function, but generally takes the production function as a given element of that problem. (In specialized long-run models, the firm may choose its capital investments to choose among production technologies). The Econ Model application The Demand for Labor emphasize the role of the production function and marginal product in determining the profit-maximizing demand for labor. Short Run Production: A short-run production represents a specific period in time in which input and output levels are defined in specific ways. The goal of a short-run production is to create an upwardsloping supply curve. When defining a short-run production, you should consider the entirety of the production and identify the main components of this type of production. The short run is a period of time in which only one input (say labor) is allowed to vary while other inputs land and capital are held fixed. In the short run, therefore, production can be increased with one variable factor and other factors remaining constant. In the short run, the law of variable proportion governs the production behavior of a firm. The law of variable proportion shows the direction and rate of change in the output of firm when the amount of only one factor of production is varied while other factors of production are held constant.

    Long Run Production: The long run is the lengthy period of time during with all inputs can be varied. There is no fixed output in the long run. All factors of production are variable inputs. We now analyze production function by allowing two factors say labor and capital to very while all others are held constant. With both factors are variable, a firm can produce a given level of output by using more labor and less capital or a greater amount of capital and less labor or moderate amounts of both. A firm continues to substitute one input for another while continuing to produce the same level of output.

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