GMS 402 Chapter Notes - Chapter 5: Production Function, Longrun, Diminishing Returns
5 Jan 2018
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In this case the only short-run input decision to be made by a manager is how much labor to utilize: the short-run production function is essentially only a function of labor, since capital is fixed rather than variable. If k* is the fixed level of capital, the short-run production function may be written as: q = f(l) = f(k*, l) In the short run, more labor is needed to produce more output, because increasing capital is not possible: the long run is defined as the horizon over which the manager can adjust all factors of production. For example, the total product of the production process described in. Table 5 1 when 5 units of labor are employed is 1,100. In particular, the average product of labor (apl) is. Figure 5 1 shows graphically the relationship among total product, marginal product, and average product.
