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<!doctype html><html class=html lang=en-us dir=ltr><head><meta charset=utf-8><meta name=viewport content="width=device-width"><title>Unit 6 | Freedoms4</title><link rel=stylesheet href=/css/style.min.34d0accb85f8ec23ceee8c29eef5907823b531d8acb9e6bdf45a3b37ad028d30.css integrity="sha256-NNCsy4X47CPO7owp7vWQeCO1Mdisuea99Fo7N60CjTA=" crossorigin=anonymous><link rel=icon href=/favicon.ico><meta name=description content=" May 02, 2026 # Production Function # The production function states the functional relationship between the factors of production and the number of products.
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Q = f (L, C, N)
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Here, Q = Quantity of output, L = labour, C = capital, N = land.
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Time Elements in Production Function # A) Short run # In the short run, only some of the inputs can be varied, but not all. Some factors will remain fixed, and some will be variable."><meta property="og:url" content="https://freedoms4.org/uninotes/s1/et-dcm1107/unit6/self/"><meta property="og:site_name" content="Freedoms4"><meta property="og:title" content="Unit 6"><meta property="og:description" content="May 02, 2026 # Production Function # The production function states the functional relationship between the factors of production and the number of products.
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Q = f (L, C, N)
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Here, Q = Quantity of output, L = labour, C = capital, N = land.
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Time Elements in Production Function # A) Short run # In the short run, only some of the inputs can be varied, but not all. Some factors will remain fixed, and some will be variable."><meta property="og:locale" content="en_us"><meta property="og:type" content="article"><meta property="article:section" content="uninotes"><meta itemprop=name content="Unit 6"><meta itemprop=description content="May 02, 2026 # Production Function # The production function states the functional relationship between the factors of production and the number of products.
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Q = f (L, C, N)
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Here, Q = Quantity of output, L = labour, C = capital, N = land.
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› <a href=/uninotes/s1/et-dcm1107/unit6/>Unit 6</a>
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› <span>Self</span></nav><div class=uninotes-meta><span class=uninotes-meta__pill>S1</span>
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<span class=uninotes-meta__pill>ET DCM1107</span>
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<span class="uninotes-meta__pill uninotes-meta__pill--self">Self</span></div><h1>Unit 6</h1><details class=toc><summary class=toc__summary>Table of Contents</summary><nav id=TableOfContents><ul><li><ul><li><a href=#may-02-2026><em><strong>May 02, 2026</strong></em></a></li></ul></li><li><a href=#production-function>Production Function</a></li><li><a href=#time-elements-in-production-function>Time Elements in Production Function</a><ul><li><a href=#a-short-run>A) Short run</a></li><li><a href=#b-long-run>B) Long run</a></li><li><a href=#c-very-long-run>C) Very long run</a></li></ul></li><li><a href=#three-aspects-of-the-production-function>Three Aspects of the Production Function</a><ul><li><a href=#a-total-production-tp>A) Total Production (TP)</a></li><li><a href=#b-average-production-ap>B) Average Production (AP)</a></li><li><a href=#c-marginal-production-mp>C) Marginal Production (MP)</a></li></ul></li><li><a href=#isoquants>Isoquants</a></li><li><a href=#types-of-isoquant-curves>Types of Isoquant Curves</a><ul><li><a href=#a-linear-isoquant-curve>A) Linear Isoquant Curve</a></li><li><a href=#b-right-angle-isoquant-curve>B) Right Angle Isoquant Curve</a></li><li><a href=#c-kinked-isoquant-curve>C) Kinked Isoquant Curve</a></li><li><a href=#d-convex-isoquant-curve>D) Convex Isoquant Curve</a></li></ul></li><li><a href=#characteristics-of-isoquant-curves>Characteristics of Isoquant Curves</a></li><li><a href=#marginal-rate-of-technical-substitution>Marginal Rate of Technical Substitution</a></li><li><a href=#revenue>Revenue</a><ul><li><a href=#a-total-revenue>A) Total Revenue:</a></li><li><a href=#b-average-revenue>B) Average Revenue:</a></li><li><a href=#c-marginal-revenue>C) Marginal Revenue:</a></li></ul></li></ul></nav></details><h3 class=heading id=may-02-2026><em><strong>May 02, 2026</strong></em><span class=heading__anchor> <a href=#may-02-2026>#</a></span></h3><h2 class=heading id=production-function>Production Function<span class=heading__anchor> <a href=#production-function>#</a></span></h2><p>The production function states the functional relationship between the factors of production and the number of products.</p><p>Q = f (L, C, N)<br>Here, Q = Quantity of output, L = labour, C = capital, N = land.</p><h2 class=heading id=time-elements-in-production-function>Time Elements in Production Function<span class=heading__anchor> <a href=#time-elements-in-production-function>#</a></span></h2><h3 class=heading id=a-short-run>A) Short run<span class=heading__anchor> <a href=#a-short-run>#</a></span></h3><p>In the short run, only some of the inputs can be varied, but not all. Some factors will remain fixed, and some will be variable.</p><h3 class=heading id=b-long-run>B) Long run<span class=heading__anchor> <a href=#b-long-run>#</a></span></h3><p>In this period, not only can variable factors be increased or decreased, but fixed factors
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can also be changed. In other words, all factors of production can be varied.</p><h3 class=heading id=c-very-long-run>C) Very long run<span class=heading__anchor> <a href=#c-very-long-run>#</a></span></h3><p>This time period is so long that even the state of technology is also changed. Such technological changes are initiated by a long process of continuous research and development and it takes a very long time to apply.</p><h2 class=heading id=three-aspects-of-the-production-function>Three Aspects of the Production Function<span class=heading__anchor> <a href=#three-aspects-of-the-production-function>#</a></span></h2><h3 class=heading id=a-total-production-tp>A) Total Production (TP)<span class=heading__anchor> <a href=#a-total-production-tp>#</a></span></h3><p>Total production refers to the total units of output produced per unit of time by all factor inputs. In the short run, the total output increases because of the alteration in the variable factor inputs, shown mathematically in the equation:</p><p>TP = f (QVF)<br>Where, f = functional relationship, QVF = the quantity of variable factors.</p><h3 class=heading id=b-average-production-ap>B) Average Production (AP)<span class=heading__anchor> <a href=#b-average-production-ap>#</a></span></h3><p>AP = TP/QVF<br>Where, TP = Total Production, QVF = the quantify of variable factors.</p><h3 class=heading id=c-marginal-production-mp>C) Marginal Production (MP)<span class=heading__anchor> <a href=#c-marginal-production-mp>#</a></span></h3><p>Marginal production refers to the additional units produced with the usage of the last variable factor. In other words, it is the change in total production that takes place due to the addition of a variable factor. All other factors remain constant, and the addition realized in the total product is the marginal product (M.P.). Mathematically, it is shown as:</p><p>MP = n – 1<br>Where, MP = Marginal Production, n = total output increased due to the addition of one unit of the variable factor (n - 1 = total no. of factors before the increase of a marginal unit).</p><h2 class=heading id=isoquants>Isoquants<span class=heading__anchor> <a href=#isoquants>#</a></span></h2><p>An isoquant is a locus of points that represent the different technically efficient ways of combining the factors of production for producing a fixed level of output. Isoquant term is taken from a Greek word ‘iso’, which implies ‘equal’, and ‘quants’, which means ‘quantity’. The isoquant curve is known as the ‘equal product curve’ or production indifference curve. An isoquant curve presents the locus of points that indicate various combinations of two inputs – capital and labour, producing a specific quantity of output or another combination which produces the same output.</p><h2 class=heading id=types-of-isoquant-curves>Types of Isoquant Curves<span class=heading__anchor> <a href=#types-of-isoquant-curves>#</a></span></h2><h3 class=heading id=a-linear-isoquant-curve>A) Linear Isoquant Curve<span class=heading__anchor> <a href=#a-linear-isoquant-curve>#</a></span></h3><p>This curve is a straight line curve. It implies that by employing either capital or labour through various combinations, any quantity can be produced.</p><h3 class=heading id=b-right-angle-isoquant-curve>B) Right Angle Isoquant Curve<span class=heading__anchor> <a href=#b-right-angle-isoquant-curve>#</a></span></h3><p>According to this type of isoquant curve, there is substitution between the factors of production, and they have a major complementary nature between them. This means that there is only a single way of manufacturing any one commodity. This form of the curve is also referred to as the ‘Leontief Iso-quant’ or ‘input-output isoquant’ right-angled curve.</p><h3 class=heading id=c-kinked-isoquant-curve>C) Kinked Isoquant Curve<span class=heading__anchor> <a href=#c-kinked-isoquant-curve>#</a></span></h3><p>In this form of the curve, there is a limited substitutability between the different factors of production, and this substitution of factors can be observed at the kinks because there are not many processes involved in producing any one commodity. A kinked isoquant curve is also called ‘activity analysis programming isoquant or linear programming isoquant’.</p><h3 class=heading id=d-convex-isoquant-curve>D) Convex Isoquant Curve<span class=heading__anchor> <a href=#d-convex-isoquant-curve>#</a></span></h3><p>In this form of isoquant curve, the factors of production can be substituted with each other only to a certain level. This type of isoquant curve is in a convex shape and is smooth at the origin.</p><h2 class=heading id=characteristics-of-isoquant-curves>Characteristics of Isoquant Curves<span class=heading__anchor> <a href=#characteristics-of-isoquant-curves>#</a></span></h2><ul><li>Isoquant curves slope downwards.</li><li>Isoquant curves are convex to the origin.</li><li>Isoquant curves do not intersect each other.</li><li>A higher isoquant shows a higher level of output.</li></ul><h2 class=heading id=marginal-rate-of-technical-substitution>Marginal Rate of Technical Substitution<span class=heading__anchor> <a href=#marginal-rate-of-technical-substitution>#</a></span></h2><p>The MRTS is a theory in economics that is used to show the rate at which one factor of input should decrease to maintain the same level of output when another factor is increased.</p><p>MRTS = MPL/MPK</p><p>Where, MPL = Marginal Product of Labour, MPK = Marginal Product of Capital.</p><h2 class=heading id=revenue>Revenue<span class=heading__anchor> <a href=#revenue>#</a></span></h2><h3 class=heading id=a-total-revenue>A) Total Revenue:<span class=heading__anchor> <a href=#a-total-revenue>#</a></span></h3><p>TR = AR × Q</p><p>Where, TR is Total Revenue, AR = Average Revenue, Q = Output.</p><h3 class=heading id=b-average-revenue>B) Average Revenue:<span class=heading__anchor> <a href=#b-average-revenue>#</a></span></h3><p>AR = TR/Q</p><p>Where, AR = Average Revenue, TR = Total Revenue, Q = Output.</p><h3 class=heading id=c-marginal-revenue>C) Marginal Revenue:<span class=heading__anchor> <a href=#c-marginal-revenue>#</a></span></h3><p>Marginal revenue is the net revenue obtained by selling an extra unit of the concerned commodity. It is the addition made to the total revenue by selling one more unit of the goods. Marginal revenue is computed by the division of the change in the rate of total revenue by the change in the rate of quantity.</p><p>MR = ΔTR/ΔQ (Marginal Revenue = Change in Total Revenue/Change in Quantity)</p><nav class=page-nav><a class=page-nav__previous-link href=/uninotes/s1/et-dcm1107/unit5/>← Unit 5</a>
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