SHORT RUN VS LONG RUN Production Function:
SHORT PERIOD PRODUCTION FUNCTIONS: The time period in which some factors of production are fixed while some factors of production are variable, is known as short period. It explains the technical relationship between outputs and inputs in the short run. The fixed factor is land and the variable factor is capital. It is also known as Variable proportions type production function.
LONG PERIOD PRODUCTION FUNCTION: The time period in which all the factors of production are variable is known as long period production function. It means that all the factors of production can be changed in the long period and there exists no difference between the fixed and variable factors of production.
SHORT RUN VS LONG RUN PRODUCTION FUNCTION
BASIS OF DIFFERENCE | SHORT PERIOD PRODUCTION FUNCTION | LONG PERIOD PRODUCTION FUNCTION |
MEANING | It explains the technical relationship between outputs and inputs in the short run. | It explains the technical relationship between inputs and outputs in the long run. |
KNOWN AS | The short period production function is also known as variable proportions type production function as in this the capital- labour ratio changes. | The long period production function is also known as constant proportions type production function as in this capital- labor ratio remains constant and do not change. |
LAW APPLICABLE | The short run production function can be explained with the help of Law of returns to factor. | The long run production function can be explained with the help of Law of Returns to scale. |
CURVE | The curve of short period production function is straight line parallel to horizontal axis. | The curve of long run production function is upward sloping curve. |
NATURE OF FACTORS | In this, One factor ‘land’ is fixed and other factor ‘labour’ is variable. | In this, both factors are variable. |