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Long Run Production With Variable Inputs:
The long run is the lengthy period of time during with all inputs can be varied. There are no fixed output in the long run. All factors of production are variable inputs.
We now analyze production function by allowing two factors say labor and capital to very while all others are held constant. With both factors are variable, a firm can produce a given level of output by using more labor and less capital or a greater amount of capital and less labor or moderate amounts of both. A firm continues to substitute one input for another while continuing to produce the same level of output.
If two inputs say labor and capital are allowed to vary, the resulting production function can be illustrated in the figure 12(a).
Diagram/Figure:In this figure each curve (called an isoquant) represents a different level of output. The curves which lie higher and to the right represent greater output levels than curves which are lower and to the left.
For example, point D represents a higher output level of 250 units than point A or B which shows output level of 150 units.
The curve isoquant which represents 150 units of output illustrate that the same level of output (150 units) can be produced with different combinations of labor and capital. Combination of labor and capital represented by A, can employ OL1 quantity of labor and OC1 units of capital to produce 150 units of output.
The combination of labor and capital represented by point B will use only OL2 units of labor and OC1 of capital to produce the same level of output. Thus, if a country has surplus labor and less capital, it may use the combination of labor and capital represented by point A. In case the country has abundant capital and less labor, it might produce at point B. The isoquants through points A and B shows all the different combinations of labor and capita that can be used to produce 150 units of output.
By ArkaBrata Bandyapadhyay,B.Sc Biotech, MBA.
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What is production function with one variable input?
The production function for a firm is the relationship between the quantities of inputs per time period and the maximum output that can be produced. It can be calculated for one or more than one variable factors of production. The one variable factor of production function corresponds to the short-run during which at least one factor of production is fixed .
Classification of inputs in economics?
-these are inputs that do not change with the volume of production.This means, wheter you produce or not, these factors of production are unchanged. -these inputs change in accordance with the volume of production. NO production means NO variable inputs, while more production means more variable inputs. -sage- :P e-add: sage.ronquillo@yahoo.com
Man is the most important factor of production. discuss?
Factors of production refers to the inputs of the production process.
Is Cobb Douglas production function is constant elasticity substitution production function?
Yes, the Cobb-Douglas production function is a specific type of constant elasticity of substitution (CES) production function. In a Cobb-Douglas function, the elasticity of substitution between inputs is constant and equal to one. This means that the percentage change in the ratio of inputs used will result in a proportional percentage change in the marginal rate of technical substitution, reflecting a consistent trade-off between the inputs.
What is the significance of the Leontief production function in economic analysis and how does it differ from other production functions?
The Leontief production function is significant in economic analysis because it focuses on the fixed proportions of inputs needed to produce a certain level of output. This differs from other production functions, such as the Cobb-Douglas function, which allow for varying proportions of inputs. The Leontief function is useful for analyzing industries where inputs must be used in specific ratios, like in manufacturing or agriculture.
What is production function with one variable input?
The production function for a firm is the relationship between the quantities of inputs per time period and the maximum output that can be produced. It can be calculated for one or more than one variable factors of production. The one variable factor of production function corresponds to the short-run during which at least one factor of production is fixed .
Classification of inputs in economics?
-these are inputs that do not change with the volume of production.This means, wheter you produce or not, these factors of production are unchanged. -these inputs change in accordance with the volume of production. NO production means NO variable inputs, while more production means more variable inputs. -sage- :P e-add: sage.ronquillo@yahoo.com
Man is the most important factor of production. discuss?
Factors of production refers to the inputs of the production process.
Production function relates to?
physical inputs to physical outputs
Is Cobb Douglas production function is constant elasticity substitution production function?
Yes, the Cobb-Douglas production function is a specific type of constant elasticity of substitution (CES) production function. In a Cobb-Douglas function, the elasticity of substitution between inputs is constant and equal to one. This means that the percentage change in the ratio of inputs used will result in a proportional percentage change in the marginal rate of technical substitution, reflecting a consistent trade-off between the inputs.
What is homogeneous and non homogeneous production function?
A homogeneous production function exhibits constant returns to scale, meaning that doubling all inputs leads to an exactly doubled output. A non-homogeneous production function does not exhibit constant returns to scale and shows varying output levels when inputs are changed.
What is the significance of the Leontief production function in economic analysis and how does it differ from other production functions?
The Leontief production function is significant in economic analysis because it focuses on the fixed proportions of inputs needed to produce a certain level of output. This differs from other production functions, such as the Cobb-Douglas function, which allow for varying proportions of inputs. The Leontief function is useful for analyzing industries where inputs must be used in specific ratios, like in manufacturing or agriculture.
What is the production function with one variable input?
The production function with one variable input describes the relationship between the quantity of a single input, typically labor, and the amount of output produced. It can be represented mathematically as ( Q = f(L) ), where ( Q ) is the quantity of output and ( L ) is the quantity of the variable input. This function often exhibits diminishing marginal returns, meaning that as more of the variable input is added while keeping other inputs constant, the additional output generated from each additional unit of input eventually decreases. This concept helps firms optimize their resource allocation and production levels.
The difference between fixed and variable inputs?
difference between fixed and variable inputs
How does a longrun production function differ from a shortrun production function?
üProduction function shows technological relationship between quantity of output and quantity of various inputs used in production. üProduction function in economic sense states the maximum output that can be produced during a period with certain quantity of various inputs in the existing state of technology. üIt is the tool of analysis which is used to explain input - output relationships. üIn general it tells that production of a commodity depends on specified inputs. ü ü
What is the Cobb-Douglas function?
In economics, the Cobb-Douglas production function is a particular functional form of the production function, widely used to represent the technological relationship between the amounts of two or more inputs, particularly physical capital and labor, and the amount of output that can be produced by those inputs.
To what extent has technical progress altered the shape of the production function?
Technical progress has significantly altered the shape of the production function by allowing for increased output with the same or fewer inputs. It has shifted the production function upward, leading to higher productivity and efficiency in the production process. Additionally, technical progress has enabled the introduction of new ways to combine inputs, leading to new shapes and forms of production functions.
