Define the production function. Discuss why the production function exhibits diminishing returns. What is job rationing...

Define the production function. Discuss why the production function exhibits diminishing returns.

What is job rationing and how does it relate to unemployment? What factors can lead to job rationing? Briefly explain these factors.

Expert Solution

Question - 1 and 2 are totally different questions. They are not the sub part of each other. So, i can solve one of them. Here, the answer of first question.

(1.) The Production functions show that output is the function of different factors of production used in the production process. The factors which generally used to describe the Production functions is Capital (K) and Labor (L). The production function can be represented by the following equation:

The production function exhibits diminishing returns, when the proportion by which we increase our factors of production (i,e L and K), the output not increase by the proportion of factor increase.

For more clear understanding, suppose we have production function =

Now, if we increase Capital (K) and Labor (L) both by 4 times. But output increase by less than 4 times. In such situation, the production function exhibits diminishing returns.

Rahul Sunny answered 1 year ago

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