Firms and Their Production Decisions

2 years ago
Microeconomics

Factors of production – Inputs into the production process (eg. Labor, capital, and materials).

Production function – Function showing the highest output that a firm can produce for every specified combination of inputs.

                                                           q = F(K, L)

**As technology becomes more advanced the production function changes, since more can be produced in less time.

Short run – Period of time in which quantities of one or more production factors cannot be changed.

Long run – Amount of time needed to make all production inputs variable.

Fixed input – Production factor that cannot be varied.

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Bijay Satyal
Dec 1, 2021
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