The document discusses production functions and the law of variable proportions. It defines short run and long run production functions based on whether factors of production are fixed or variable. It also describes how production functions can be used to calculate least cost input combinations, maximum output combinations, and aid long run decision making. Finally, it defines the law of variable proportions as getting lower per-unit returns when adding more of one variable factor while holding others constant, and explains how this law helps understand production processes and diminishing returns across the economy.

1. PRODUCTION FUNCTION

2. TWO TYPES OF
PRODUCTION FUNCTION
• Short run production function: The short
run is a time period where at least one factor
of production is in fixed supply.
• Long run production function: Long run is a
period where fixed factors is changed.

3. Managerial Use of
Production Function
• Calculate the least cost input combination.
• Calculate the maximum-input-output
combination
• Deciding on the value of employing a variable
input factor
• Aid in long run decision making

5. LAW OF VARIABLE
PROPORTION
• The law of variable proportions states that in
all productive processes, adding more of one
factor of productions while others are held
constant will at some point yield lower per-
unit returns

6. Importance of the law of
variable proportion
• It is helpful in understanding clearly the
process of production.
• The tendency of diminishing returns is found
in all sectors of the economy .
• The law tells us that any increase in the units
of variable factor will lead to increase in the
total product at a diminishing rate.