PRODUCTION THEORY (Short-Run Period) || Iden App GH

Course Details

Economics
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PRODUCTION THEORY (Short-Run Period)

By Bismark Denutsui
12/Dec/2025
2 Students

Course Description

Production Theory in the short run explains how a business uses its fixed inputs (like machines, buildings) and variable inputs (like labor, raw materials) to produce goods or services. In the short-run period, at least one input is fixed, meaning the firm cannot change it immediately.
It focuses on how output changes when a firm increases or decreases variable inputs while fixed inputs remain constant. Key concepts include the Law of Diminishing Returns, total product, average product, and marginal product. Short-run production theory helps businesses understand how to use their resources efficiently to produce at the lowest possible cost.