Question

Difference between short run and long run production function

Answer 1

The main difference between the short-run and the long-run production functions is that A. in t... A. in the short run all inputs are fixed and in the long run all inputs are variable. in the short run the firm varies all of its inputs to find the least-cost combination of inputs

Answer 2

Answer:

The difference between short run and long run production function can be drawn clearly as follows:

The short run production function can be understood as the time period over which the firm is not able to change the quantities of all inputs. Conversely, long run production function indicates the time period, over which the firm can change the quantities of all the inputs.

While in short run production function, the law of variable proportion operates, in the long-run production function, the law of returns to scale operates.

The activity level does not change in the short run production function, whereas the firm can expand or reduce the activity levels in the long run production function.

In short run production function the factor ratio changes because one input varies while the remaining are fixed in nature. As opposed, the factor proportion remains same in the long run production function, as all factor inputs vary in the same proportion.

In short run, there are barriers to the entry of firms, as well as the firms can shut down but cannot exit. On the contrary, firms are free to enter and exit in the long run