The document discusses production functions and their key characteristics in the short run and long run. It defines production functions as the technical relationship between inputs like labor and capital and maximum attainable output. In the short run, total, average, and marginal product are introduced to analyze how output changes with variable inputs like labor. Initially, marginal returns increase due to specialization, but eventually diminish with more labor due to crowding and limited capital. In the long run, all inputs can be varied to optimize production capacity.
The document discusses production functions and their key characteristics in the short run and long run. It defines production functions as the technical relationship between inputs like labor and capital and maximum attainable output. In the short run, total, average, and marginal product are introduced to analyze how output changes with variable inputs like labor. Initially, marginal returns increase due to specialization, but eventually diminish with more labor due to crowding and limited capital. In the long run, all inputs can be varied to optimize production capacity.
The document discusses production functions and their key characteristics in the short run and long run. It defines production functions as the technical relationship between inputs like labor and capital and maximum attainable output. In the short run, total, average, and marginal product are introduced to analyze how output changes with variable inputs like labor. Initially, marginal returns increase due to specialization, but eventually diminish with more labor due to crowding and limited capital. In the long run, all inputs can be varied to optimize production capacity.