Saturday, August 4, 2018

Production function and it's types

The production function can be defined as a functional relationship between input and output that is, maximum output that a firm can produce for every specific combinations of input.
The production function can be stated as:
                           
                           Q=F(K,L)
This production function indicates using certain combinations of Capital and Labour, maximum amount of Quantity can be produced.

Types of production function :

1.Short run production function :

This refers to a period of time where atleast one factor remains constant. Factors that can't be varied over this period are called fixed factor.

For example, Q=f(K-bar,L) here, maximum amount of quality can be produced while labour is variable and capital is fixed.

2.Long run production function :

This refers to a situation all the inputs for production are variable or there is no fixed factor.

For example,  Q=f(K,L) here, to produce maximum amount of quantity can be used by all the factors which are variable in nature.

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