Answer to Question #44655 in Microeconomics for Tori

Question

short run and long run are not defined here in terms of specific time, rather these are defined in terms of the variability of the factors of production- do u agree with the statement? Explain

Answer 1

Production function relates physical output of a production process to physical inputs or factors of production. The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency, the defining focus of economics.

In a short run production function at least one of the inputs is fixed. In the long run all factor inputs are variable at the discretion of management. I agree with the statement "short-run and longrun are not defined here in terms of a specific time,rather these are defined in terms of the variability of the factors of production", because the production function is defined by its inputs, but not by the specific time.