how many steps of population are there in the short run production function
Answers
The three stages of short-run production are readily seen with the three product curves--total product, average product, and marginal product. A set of product curves is presented in the exhibit to the right. The variable input in this example is labor. The top panel contains the total product curve (TP).
Answer by @Neelraj
Answer:
Production Functions
The production function relates the quantity of factor inputs used by a business to the amount of output that result.
We use three measures of production and productivity:
Total product (total output). In manufacturing industries such as motor vehicles, it is straightforward to measure how much output is being produced. In service or knowledge industries, where output is less “tangible" it is harder to measure productivity.
Average product measures output per-worker-employed or output-per-unit of capital.
Marginal product is the change in output from increasing the number of workers used by one person, or by adding one more machine to the production process in the short run.
The length of time required for the long run varies from sector to sector. In the nuclear power industry for example, it can take many years to commission new nuclear power plant and capacity. This is something the UK government has to consider as it reviews our future sources of energy.
Short Run Production Function
The short run is a time period where at least one factor of production is in fixed supply
A business has chosen its scale of production and sticks with this in the short run
We assume that the quantity of plant and machinery is fixed and that production can be altered by changing variable inputs such as labour, raw materials and energy
Diminishing Returns
In the short run, the law of diminishing returns states that as more units of a variable input are added to fixed amounts of land and capital, the change in total output will first rise and then fall
Diminishing returns to labour occurs when marginal product of labour starts to fall. This means that total output will be increasing at a decreasing rate
What might cause marginal product to fall?
One explanation is that, beyond a certain point, new workers will not have as much capital equipment to work with so it becomes diluted among a larger workforce I.e., there is less capital per worker.
In the following numerical example, we assume that there is a fixed supply of capital (capital = 20 units) to which extra units of labour are added to the production process.
Initially, marginal product is rising – e.g. the 4th worker adds 26 to output and the 5th worker adds 28 and the 6th worker increases output by 29.
Marginal product then starts to fall. The 7th worker supplies 26 units and the 8th worker just 20 added units. At this point production demonstrates diminishing returns.
Total output will continue to rise as long as marginal product is positive
Average product will rise if marginal product > average product
Numerical Example of the Law of Diminishing Returns
Capital Input Labour Input Total Output Marginal Product Average Product of Labour
20 1 5 5
20 2 16 11 8
20 3 30 14 10
20 4 56 26 14
20 5 85 28 17
20 6 114 29 19
20 7 140 26 20
20 8 160 20 20
20 9 171 11 19
20 10 180 9 18
Diminishing returns and marginal cost
Criticisms of the Law of Diminishing Returns
How realistic is this