what is short run? explain the behaviour of total product curve in short run ?
Answers
Explanation:
refer the attachment hope it helps you
In Microeconomics or Business Studies,short run is a period of time when some factors or inputs of production are fixed for firms or companies.The Total Product Curve is convex or curve shaped in the short run.
Explanation:
Short run is a time period witnessed by firms or companies during which some factors or inputs of production are fixed.Traditionally,only the labor input is variable in short run.It is customarily believed that short run in business is usually less than 1 year and the firms/companies do not have sufficient time to modify or adjust all the factors of production in accordance with their production needs or objective objectives.For example,if a firm or company intends to expand production capacity by constructing another factory then it is not able to do so because of the time constraint.However,if it wants to employ more workers/laborers into the production process,it can do so during the short run.
In short run,the Total Product Curve illustrates the relationship between total output and labor.It exhibits the law of diminishing returns on labor,indicating that as more labors are employed by the firm/company in the production process,the labor productivity gradually decreases.It is true in the short run due to the fact that all other factors of production are constant and only labor input is variable.If the firm/company hires more labor,there are no other inputs such as equipment,physical capital,machinery etc that can assist the labor force to improve productivity level and hence,the labor productivity declines with more number of laborers and no supporting resources to assist them in work.This also explains why the shape of total product curve is concave in the short run.