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Production
Function
CH 5 Microeconomics | Class 11
Hand-written Notes
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 Microeconomics Chapter-5
2

Production Function

* Production Function *
It is an
escpnession of the
technological relation between
physical inputs and outputs of a
good .

Q =

f ( Fi Fe Fs
,
,
. . . .
Fn
)
Q =

Quantity of Output

f Function
-
-

Factors
F
of production
-

* Short Run *
Short Run period in which output be
refers to a can

changed by wants changing toonly increase

variable
factors leg If a
-
.

short
farmer he it
production
labour
in

run
,
increase
can
by increasing .

*
Long Run

It
period in which be
refersperiod to
to a
output can

changed by changing all factors of production

* Total Prod cut (TPP)
the total
It
refers by
of goodswithproducednumber
→
to
quantity a

firm during a
given
time period given
of inputs .

Tp =
Ap × w. .

of units
of factors
or
TP =
I peep

Product ( API APP)

*
Average
It
output variable input
refers to
per unit
of
→

AP = TP
Wo units
.

of of factor

Product LMP1 Mpp)

*
Marginal
It addition to total when unit
refers production
→
to one more
,

of variable
factor is
employed .

Mph = T Ph -

Tpm ,

or

MP = OTP
•
spits
* TP MP, AP Schedule he Graph -

:/ :/ :L
units variable
Fined
factor faYYabowe
of Tp Mp Ap
( land ) )

1 O o - -

I 1 2 2 2

: : :
I 6 29 4 48

1 7 31 2 4.4

1 8 31 0
3.9
1 9 29
-
2 3.2

* Graph
# Relationship beth TP and MP

As at rate
increasing
i .

T.rs . increases ,
MP rises .

at
2 . As TP . increases at increases
decreasing rate ,
MP
falls .

3- As TP .
increases at
decreasing rate
falls ,
MP .

As T.rs starts
falling
AP becomes
negative
u . .
.

# Relationship both AP Eg MP .

I .

When AP LMP ,
AP increases
2 .
When MP LAP
,
AP decreases
at
s .
Both AP and MP
fall ,
but MP
falls a
faster rate in

comparison to
fall in AP .

Both AP and but MP becomes while AP

negativeratebut
4 MP
fall
.

, ,

reinaius positive MP at
.

falls a
faster in
comparison
to
fall in AP .

# Law of Variable Proportions :

It states that
quantity of only output
→ as we increase one

up)
keeping other
inputs friend ,
total product initially increases
at
and
a
decreasing rate
,
then at a
decreasing rate
finally at a
negative rate .

It describes
following s
phases :

i .
Phase
of increasing rate
at
T.rs rises
increasing rate
→ an
.
.

→
M.p .
increase

Phase
of Decreasing return
2 .

rise at
decreasing rate
→ T P
-
.

decrease and
M.P
positive
→ .
is .
3. Phase
of Negative Return
T P
falls
→ -
.

becomes
negative
→
M.p .

Fined Factor variable Factor T.rs . M.P .

I 1 10 10
1 2 30 20

1 3 45 15

4 52 7
1

5 O
1 52
1 6 48 -
H

# Graph
--
- phase I Phase
Phase I

n
*
Assumption of the law :

It
operates in short
I .

run .

all
2 . The law
applies to fisted factors
s .
Under it ,
different units
of variable
factor can be combined
with
fiscal factor .

to the
The law
applies field of production only
4 .

The V f be
5-
effect of change in
output to due
change in -
can
-

easily determined .

become
G . Factors
of production
limit
imperfect substitutes
of each other

beyond a .

# Reasons for the law :

Law Return
s .

of increasing
Better
of factors variable
→
use

Increased
efficiency of factor
→

Returns
2. Law
of Diminishing :

Optimum bombination
of factors
→

Substitutes
Imperfect
→

s Law
of Negative Return
.

This law states that when units

of
→
more and more a variable

with
factorvariable employed
are a
frscid factor ,
then
marginal product
of factor must
fall .

x
-
-