1. What is meant by production function, Distinguish
between short runt long run in production.
Answers
Production function is a graphical curve and a mathematical function which shows the relationship between the inputs/factors of production and the total product(TP) or total output produced by the firm or company.A short run is a time period in business during which some factors/inputs are fixed and in long run,all the factors/inputs are variable.
Explanation:
In Production Economics,production function refers to a mathematical function and graphical curve which portrays the relationship between the factors of production and the TP or total output level produced by the firm.It basically shows how the TP or total output varies as the firms change the employment of various factors/inputs of production.
In business,short time is a period of time in which the firms cannot alter or modfy all the factors/inputs of production due to insufficiency or inadequacy of time.Usually,a short term in business means any time period less than 1 year and the firms do not have enough time to undertake any big or large scale projects such as expanding the entire production scale or constructing a new factory as the firms cannot change all the necessary factors/inputs within this time period.Therefore,in short run some factors/inputs are fixed and only labor is the variable input.
In contrast,long run is a timeline in business which is customarily more than 1 year and the firms and companies have enough time to alter or modify all the factors/inputs of production.The firms are able to implement any large scale or big business projects in the long run given the sufficient time period to change the production inputs/factors and expand the entire production capacity.Therefore,in long run,all the factors/inputs of production are variable and nothing is fixed.