Define the terms "production" and "production function." Differentiate between the short run and the long run based on the usage of inputs by a firm
What will be an ideal response?
Production refers to the process of transforming inputs to outputs. The relationship between the quantity of inputs used and the quantity of outputs produced is referred to as the production function.
In terms of usage of inputs, the basic difference between the short run and the long run is that in the short run only some of the firm's inputs can be varied while other inputs are fixed. However, in the long run, a firm can vary all of its inputs and there are no fixed inputs.
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U.S. households use about 75 gallons of water per capita per day on the average because
A) the price they must pay for water is low. B) there is so much fresh water in the U.S. C) they use water in irrational ways. D) water is a basic necessity of life. E) water is a basic right.
An increase in which of the following leads to a decline in the monetary base?
A) float B) discount loans C) foreign deposits at the Fed D) SDRs
The fundamental goal of a firm or a business is to
A) produce the largest number of output units possible. B) employ labor in the most socially responsible manner possible. C) organize the factors of production and take risks. D) earn the highest possible returns.
Economic analysis assumes "rational or purposeful behavior," which means that people will pursue decisions or actions
A. with minimal consideration for their emotions. B. always based on full or complete information. C. that will increase their well-being. D. without any logical faults.