Short run and long run production functions

A producer uses various inputs for producing a commodity. The most important factor in deciding the proportion in which various inputs should be used for ensuring a given level of output is the technical requirement. How many units of various inputs are required depends upon the current state of technology.

Production function explain the relationship between factor input and output under given techno* logy. In the words of Lipsy, "This (production function) is a technological relation showing, for a given state of technological knowledge, how much can be produced with given amount of input." In other words, production function explains as to for increasing the output, in which proportion various inputs or factors may be employed under given technological conditions. In short, production function may be defined as a technological relationship that tells the maximum output producible from various combina­tions of inputs.

It is clear from the above analysis that production function explains the physical relationship between input and output under given technology. The term 'input' has been used in a comprehensive manner meaning thereby, it includes factor and non-factor inputs both namely labour, capital, fuel, raw-materials etc.