Microeconomics Production Theory free essay sample

Production function shows the maximum amount of output that can be produced from a given set of input in the existing set of inputs in the existing state of technologie. the output will change when the quantity of any input is change. In real life a manufacture wants to know how much of the various factors or inputs that is land, natural resources,labour and capital will be required to produce a unit or a given quantity of a commodity during a given period of time. It is necessary for him (manufacture) to know this so that he may be able not only to asset his requirements of productive services but also roughly to estimate probable cost. Since production function is concerned with physical aspects of production, it is more a concern of an engineer or a technitation than of an economist. Only a techniqation can say what specific quantity of a good can be produced by the use of various productive resources and their combinations. We will write a custom essay sample on Microeconomics Production Theory or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Production function depends upon: a. Quantity of resources used b. State of technical knowledge c. Possible processes d. Size of the firms e. Natural of firms and organizations f. Relatitive prices of factors of production As these things change production function will change to. e. output can be increased by increasing the quantity of factors of production or of some of them. Adoption of more efficient techniques of production will add to the output. The less efficient of the techniques the smaller the output. Long run and short run production Long run refers to a period of time in which the supplies of all the inputs or variables can be changed that is the supply response is elastic. The short run refers to a period of time in which the supply of certain inputs or variables like buildings or machines are fixed or the supply response is in elastic. PPF changes with the period of time, in the very long period it changes all together because the same inputs produce different outputs. In the long run the production function depicts the whole set of choices opened to the producer that is what inputs will produce, what output. In the short run the choices open to the producer are restricted because some of the factors are fixed and can not be changed in the short period only some can valid. In this situation the producer tries to find out the relation between variable inputs and outputs.