subject: Short And Long Production Runs From An Economic Standpoint [print this page] In economics, a production run generally refers to a collection of processes that are necessary to manufacture a group of similar or related parts. It is a mathematical expression which relates the quantity of factor inputs to the quantity of outputs that result. A production run makes us of three measures of productivity; the total products, the average product, and the marginal product.
Total product is the total output that is generated from the factors of production employed by a business. In most manufacturing industries such as motor vehicles, freezers and DVD players, it is easy to measure the volume of production from labor and capital inputs that are used. But in many service or knowledge-based industries, where much of the output is intangible it is much harder to measure productivity.
Average product is the total output divided by the number of units of the variable factor of production put in use. For instance, one can measure the average output per worker employed or output per unit of capital employed in manufacturing. Marginal product refers to the change in total product when an additional unit of the variable factor of production is employed. For example, marginal product would measure the change in output that comes from increasing the employment of labor by one person, or by adding one more machine to the production process in the short run.
The typical production run can be classified into two. It can either be a short production run, or a long production run. The short run is a period of time where at least one factor of production is assumed to be in fixed supply or cannot be changed.
It is assumed that the quantity of capital inputs such as machinery is fixed and that production can be altered by suppliers through changing the demand for variable inputs such as labor, components, raw materials and energy inputs. The amount of land available for production is also fixed in a short production run.
In a long production run, all factors of production are variable. How the output of a business responds to a change in factor inputs varies, and is classified into returns to scales. Increasing returns to scale occur when the change in output is greater than the change in factor inputs.
