T3 Short run production function

Question 1

What does a production function do

Answer 1

Production function defines the relationship between production output (Q) and production import (labour - L, capital - K).

Question 2

What is a short run

Answer 2

We define the short run as the time during which the quantity of at least one import is fixed

It is the production considerations when an organisation is commencing their operations.

Question 3

What is the production function formula

Answer 3

Q = f(L,K)

Question 4

What is the product of labour (PL)

Answer 4

The relationship between output and labour.

For example the number of units produced for each input of labour e.g each employee or our worked

Question 5

What is the average product of labour. APL

Answer 5

The output produced for each unit of labour. Example each employee or each hour worked.
APL=Q/L

Question 6

What is the marginal product of labour. MPL

Answer 6

The increase in output for each additional import of labour.

MPL = ^Q/^L

Question 7

What is a fixed input

Answer 7

An input that does not vary regardless of how much output is produced

Question 8

What is the variable input

Answer 8

A variable input is an input that varies based on the amount of output produced

Question 9

What are diminishing returns

Answer 9

Reduction in marginal product of labour beyond a certain point is not as diminishing returns.
It reflects a limit on how much increase in other imports can lead to increasing outputs