Types of Production Function
Production function on the basis of the time period can be divided into two categories: Short Run Production Function and Long Run Production Function. In these production functions, the combination and behaviour of variable factors and fixed factors are different.
1. Short Run Production Function: Short Run is a period of time where output can only be changed by changing the level of variable inputs. In the short run, some factors are variable and some are fixed. Fixed factors remain constant in the short run like land, capital, plant, machinery, etc. Production can be raised by only increasing the level of variable inputs like labour. Therefore, the situation where the output is increased by only increasing the variable factors of input and keeping the fixed factors constant is termed as Short Run Production Function. This relationship is explained by the ‘Law of Variable Proportions.’
2. Long Run Production Function: Long Run is a span of time where the output can be increased by increasing all the factors of production whether it is fixed (land, capital, plant, machinery, etc.) or variable (labour). Long run is enough time to alter all the factors of production. All factors are said to be variable in the long run. Therefore, the situation where the output is increased by increasing all the inputs simultaneously and in the same proportion is termed Long Run Production Function. This relationship is explained by the ‘Law of Returns to Scale.’
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