ECON 1010 Lecture Notes - Diminishing Returns, Marginal Product, Production Function

• School: University of Manitoba
• Department: Economics
• Course: ECON 1010
• Professor: Sarrah Vakili

Document Summary

Production refers to the output of goods and services produced by businesses within a market. This production creates the supply that allows our needs and wants to be satisfied. To simplify the idea of the production function, economists create a number of time periods for analysis. Short run production: the short run is a period of time when there is at least one fixed factor input. This is usually the capital input such as plant and machinery and the stock of buildings and technology. In the short run, the output of a business expands when more variable factors of production (e. g. labour, raw materials and components) are employed. Long run production: in the long run, all of the factors of production can change giving a business the opportunity to increase the scale of its operations. For example a business may grow by adding extra labour and capital to the production process and introducing new technology into their operations.