Got started on time again. Maybe Nuwal is turning over a new leaf.Starting in on costs again. Lots of confusion in the class. Then the production function.
The short-period production function is also known as the law of diminishing returns. The short period is the time span in which we cannot change fixed inputs. Output can only be increased or decreased by changing variable factors.
The production function is the relationsip between the outputs of a process an its inputs.
For the law of diminishing returns to apply, at least one factor of production must be fixed. All other factors may vary. The method of production may not change. The technology used in production may not change.
The combined effects of changing the variable factors in a situation like this will cause output to increase at a variable rate. The total output will first increase at an increasing rate, and ultimately increases at a diminishing rate. It is possible for the diminishing rate to result in a negative rate; that is, increasing variable factors can reduce production.
As more and more units of labor are added, marginal output first increases, and then diminishes, possibly even to zero or negative output.