Saved Bookmarks
| 1. |
What is short-run production function ? What is meant by returns to a factor ? |
|
Answer» In variable proportion production function, proportion of factors utilised changes because in short-run, all factors cannot be changed. Those factors which cannot be changed due to short period, are called fixed factors. Few factors of production are variable in the short-run- Capital, Capital goods, land, production technique, etc. are mainly fixed factors or remain unchanged in short period while labour units are variable. Size of plant also remains unchanged in short-run-In this way, few factors of production are fixed and few are variable in short-run By changing variable factors ratio of factors utilized also changes and consequently quantity of production or output varies. This is called’ variable Proportion production Function’. |
|