Sunday, 23 February 2020

Laws of Production


Laws of Production

The law of variable proportion of says that as more and more of the factor input is
employed, all other input quantities remaining constant, a point will eventually be reached
where additional quantities of varying input will yield diminishing marginal contributions
to total product.
Returns to scale are classified as: (a) Increasing Returns to Scale (IRS), (b) Constant Returns
to Scale (CRS) and (c) Decreasing Returns to Scale (DRS).

Fixed inputs: Inputs that cannot be readily changed during the time period under consideration
Inputs: Resources used in the production of goods and services
Long-run: The time period when all inputs become variable
Short-run: The time period during which at least one input is fixed
Variable inputs: Inputs that can be varied easily and on very short notice

No comments:

Post a Comment