Class 12 Micro Economics - Chapter Production and Costs NCERT Solutions | Explain the concepts of the short run an
Explain the concepts of the short run and the long run.
Short Run: In short run, a firm cannot change all the inputs, which means that the output can be increased (decreased) only by employing more (less) of the variable factor (labour). It is generally assumed that in short run a firm does not have sufficient or enough time to vary its fixed factors such as, installing a new machine, etc. Hence, the output levels vary only because of varying employment levels of the variable factor. Algebraically, the short run production function is expressed as
Qx= f (L,K)
Where,
Qx = units of output x produced
L = labour input
K = constant units of capital
Long Run: In long run, a firm can change all its inputs, which means that the output can be increased (decreased) by employing more (less) of both the inputs − variable and fixed factors. In the long run, all inputs (including capital) are variable and can be changed according to the required levels of output. The law that explains this long run concept is called return to scale. The long run production function is expressed as
Qx= f (L,K)
Both L and K are variable and can be varied.
More Questions From Class 12 Micro Economics - Chapter Production and Costs
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Let the production function of a firm be Q=5L1/2K1/2Q=5L1/2K1/2 Find out the maximum possible output that the firm can produce with 100 units of LL and 100 units of KK.
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Explain the relationship between the marginal products and the total product of an input.
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At which point does the SMC curve intersect the SAC curve? Give a reason in support of your answer.
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From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity
1
2
3
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5
6
7
8
9
Marginal
Revenue
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6
2
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Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.
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A monopoly firm has a total fixed cost of Rs 100 and has the following demand schedule:
Quantity
1
2
3
4
5
6
7
8
9
10
Marginal
Revenue
100
90
80
70
60
50
40
30
20
10
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