What are production functions and returns to a factor?

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Solution

Returns to a factor are used to define the short-run production function. It explains how the output of variable factors changes when keeping the fixed factors constant. Hence, returns to factor is a phenomenon during the short run.

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Similar questions

When does a production function satisfy increasing returns to scale?

When does a production function satisfy constant returns to scale?

When does a production function satisfy decreasing returns to scale?

Giving reasons state the following statements whether true or false:-

(i) When there are diminishing returns to a factor total product always decreases

(ii) Total product will increase only when marginal product increases

(iii) Increase in total product always indicate that there are increasing reaturns to a factor

(iv) When there are diminishing returns to a factor, both always falls.

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