Answer to Question #205115 in Microeconomics for azhar khan dawar

Question

What is a production function? How does a long-run production function differ from a short-run production function?

Answer 1

The physical relationship between the inputs that are used and the resulting output is known as the production function. It is the process of getting the maximum output from the inputs quantity given, in a particular time period. It is expressed as :

Q = f(i₁, i₂,...…i_n)

where Q is the output of a specified good and i₁, i₂,...…i_n are the inputs usable in producing this good.

In short run production function, there are some factors that are fixed. In this, production will increase when more units of variable factors are used with the fixed factor whereas in long run production function, all the factors are in variable supply. In this, increase in production will happen when all factors are increased in same proportion.