question_answer

Explain the effect of the following on elasticity of supply of the good :

(i) Nature of inputs used

(ii) Technique of production

Or Distinguish between short-run and long-run production functions.

Answer:

The effect of the following on elasticity of supply of the good is as follows: (i) Nature of Inputs Used The Elasticity of Supply depends on the nature of inputs used for the production of a commodity. If commonly available inputs are used, supply will be elastic, but in case of scarcely available inputs, the supply will be inelastic. (ii) Technique of Production In case of production of a commodity, supply will be less elastic if it involves the use of a complex and expensive technology. On the other hand, use of a simple technology facilitates quicker changes in output and supply.       Or Difference between short-run production function and long-run production function are:

Basis	Short ?run Production Function	Long ?run Production
Nature of Factors	Some factors are variable while other are fixed.	All the factors are variable.
Proportions type	Short ?period production function is of variable proportions type.	Long ? period production function is of constant proportions type.
Scale of output	Scale of output remains constants	Scale of output changes.
Study of output behavior	Behaviour of output is studied with reference to ?Returns to a factor? of ?Law of Variable Proportions.	Behavior of output is studied with reference to ?Returns to scale?.