1- What do you mean by production?
Ans: Commonly production means creation of goods and services by using required raw material but in economics we define it in a slightly different way. In economics production means adding up human wants satisfying attributes in a given product or in a service capacity of a man. In other words, production is a creation of utility in a given product or service by changing shape, size, color, time, place etc, so that it can satisfy human wants and they are ready to pay for it.
2- Define factors of production.
Ans: Traditionally, the factors of production are categorized as land, labor, capital, management and technology.
These factors of production can be defined as follows.
⦁ Land- Land refers not only the surface of earth but also free gifts of nature like, land, water, air, light, heat etc.
⦁ Labor- Labor means the mental or physical effort of mankind used in production of goods and services with a view to earn money
⦁ Capital- Capital refers to the man-made goods and services (wealth) which can be further used to produce goods and services.
⦁ Management- Management refers to a process of accompetion of a task as per the requirement for achieving the goal of a business firm or enterprise in an efficient and effective manner.
⦁ Technology- Technology refers to the use of scientific knowledge to get a task processed in a better and efficient way for achieving a goal in less time, cost and effort.
3- What is a short run in economics?
Ans: The
short run is the time period just short enough that at least one of the resources i.e. an input or an industrial plant or a machine cannot be replaced by the advanced one to change in the output. It remains fixed or
inelastic. Thus in the short run, production of a commodity can be increased by
increasing the use of only variable inputs like labour and raw materials.
4- Define production function.
Ans: In economics production function may be defined as the functional or technical relationship between quantities of input (ie. land, labor, capital, organization and technology) and output. It shows how and to what extent output alters with a change in any input during a specific period of time.
The production function can be symbolized as follows.
`\Q=f(L,Ld,C,M,T....)`
Where:
Q = Output
Ld = Land
L = Labor
C = Capital
M = Management and
T = Technology
5- What do you mean by short run production?
Ans: Short run production function refers to the functional or technical relationship between variable quantities of input (i.e. labor, raw materials) and output. It shows how and to what extent output alters with a change in any variable input during a specific period of time.
The production function can be symbolized as follows.
`\Q=f(L,\barLd,\barC,\barM,\barT....)`
Where:
Q = Output
L= Labor is a variable factor.
`\barLd` = No change in land.
`\barC` = No change in capital.
`\barM` = No change in management and
`\barT` = No change in technology.`
6- Explain the various concepts of short run production function?
Ans: Production means adding up want satisfying attributes in a given product or in rendering a quality service. In other words, production is a creation of utility in a given product or service by changing shape, size, color, time, place etc, by applying factors of production so that that the product can satisfy human wants and they are ready to pay for it.
Short run production function refers to the functional or technical relationship between variable inputs and output. It shows how and to what extent output alters with a change in any variable input during a specific period of time.
The concept of short run production function can be explained as follows.
⦁ Total Product (TP)
Total product refers to the total output produced by the combination of all inputs. It is calculated multiplying average product by unit of variable inputs employed. In other words, it is the sum of marginal product.
Symbolically, TP is expressed as follows.
`\TP=APÑ…N` or
`\TP=Σ(MP_1+MP_2+.......MP_n)`
Where,
`TP` = Total product
`AP` = Average product
`N` = Units of variable input
`MP_1` = Marginal product of 1st unit of output.
`MP_2` = Marginal product of 2nd unit of output & so on.
`MP_n` = Marginal product of 'n'th unit of output.
⦁ Average Product (AP)
Average product refers to the output results per unit of input. It is calculated dividing output by variable inputs employed.
Algebraically it is expressed as follows.
`AP=\frac{TP}{N}`
Where,
`AP` = Average product,
`TP` = Total product,
`N` = Units of input employed,
⦁ Marginal Product (MP)
Marginal output is the extra output produced by the use of an extra unit of variable input. In other words, it is the ratio of change in output to the change in input and expressed as follows.
`MP=\frac{ΔTP}{ΔN}`
Where,
`MP` = Marginal product,
`ΔTP` = Change in total product,
`ΔN` = Change in unit of input,
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