1) What is meant by production, inputs, fixed inputs, variable inputs, short run, and long run? 2

1. A production is an act of growing or making goods and services for the profit motive. It is the process of using the raw material to create a new valuable commodity to be consumed by consumers.

Inputs are the material and immaterial things used in the process of production. They are the essence of output.

There are two types of inputs: variable inputs and fixed inputs. The variable inputs are the inputs used in the process of production, which is changeable.

The fixed inputs are the inputs which cannot be changed in the short run.

The short run is a period in which input all the inputs used in production cannot be changed. On the other hand, the long run is a period in which all the factors of production can be changed.

2. There is no particular period to categorize the short run and the long run. The short run and the long run depend on the number of variable and fixed inputs used in the process of production. The period in which all the factors of production or inputs are changeable is termed as the long run.

3. The production function is referred to as the function that shows the relationship between the inputs used in the process of production and the output. It shows the units of output produced with the different combination of factors of production or inputs.

4. The production function helps the firm to determine the level of output given the prices of goods and the cost of inputs. Hence, analysis of a firm's production is useful to tell a producer the best combination of inputs to get the desired output.