The Concept of Production Function | Class 11 | Economics Notes

 Production :-

             In general, the term 'production' refers to the creation of goods and services. Man by his scientific and technological knowledge can change the shapes and patterns of all goods and hence such, can raise the utility of these goods. Thus, production also refers to the creation of utility.

Production Function:-

                                  The term 'production function' refers to the relationship between physical input and physical output of a firm. In other words, production function refers to the functional relationship between physical input and physical output of a firm.

Symbolically, production function is written as -

          Q = f(N, L, K, M, .........)

Where, 

Q = total output 

N = land

L = labour

K = capital

M = raw materials 

f = functional relation 

Variable Factors :-

         Variable factors refers to those factors which  change with the change in output. Variable factors are those factors, which can be changed in the short run. They vary directly with the output. For example, Labour, raw material, etc.          

Fixed Factor :-

                   Fixed factor refers to those factor which do not change with the change in output. Fixed factors are those factors which cannot be changed in the short run. They do not vary directly with the output. For example, Capital, land, plant and machinery, etc.

Short Run Period :-

               In the short run a firm cannot alter the fixed inputs. Thus, short run period is defined as that period that is not sufficient to bring about changes in the fixed factors of production.  In other words, short period refers to the period of time in which a firm cannot change some of its factors like plant, machines, building, etc. due to insufficiency of time but can change any variable factor like labour, raw material, etc. Thus, in short run, there will be some factors of production that are fixed at predetermined levels, e.g., a farmer may have fixed amount of land.

Long Run Period :-

                   In the long run a firm can change all factors of production. Hence, a long period is a time period during which a firm can change all its factors of production including machines, building, organization, etc. In other words, it is a period of time during which supplies can adjust itself to change in demand