Production functions: short and long run

PRODUCTION FUNCTION:

The relationship between the quantity of inputs a
firm uses and the quantity of output it produces.



SHORT RUN:

Firms can vary labor (not in a fixed contract) and raw materials.

In the short run managers can send workers home, fire workers or shut down the plant.  
LONG RUN:

Firms can vary everything.  Most importantly land, the physical plant and capital within the space.  
In the long run, a firm can sell a plant and change its fixed costs.  

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