Question

Explain briefly the two types of production function.

Answer 1

Short-run production function and long-run production function. Both describe the relationship between inputs and outputs but under different conditions.

1. Short-run production function:
   • In the short run, only one input is variable, while other inputs remain constant.
   • It shows how output changes when we vary one input (like labor), keeping capital (like machines) constant.
   • It is expressed as:
     Q_x​ = f(L)
   • The change in output due to a change in a single variable input is studied under returns to a factor or the law of variable proportions.
2. Long-run production function:
   • In the long run, all inputs are variable.
   • It examines how output changes when all inputs are increased or decreased simultaneously and proportionally.
   • It is expressed as:
     Q_x ​= f(K, L)
   • The concept studied here is returns to scale, which tells how output responds to changes in the scale of production.