Final answer:
Production in the short run involves at least one fixed input while in the long run all inputs can vary. Total product is the total output, while marginal product is the output from an additional input. Diminishing marginal productivity indicates that the output per additional unit of input will eventually fall.
Step-by-step explanation:
Distinctions Between Production in the Short Run and Long Run
In economics, production can be analyzed based on time frames: the short run and the long run. Production in the short run refers to the period during which at least one input, typically capital, is fixed. Businesses can only adjust variable inputs like labor to change output levels. In contrast, production in the long run entails a period sufficient for all inputs to be variable, allowing companies to change plant sizes, introduce new technology, or vary other capital inputs.
Difference Between Total and Marginal Product
The concept of total product (TP) represents the total quantity of output produced by a firm using given inputs during a specific period. The marginal product (MP), however, is the additional output that results from utilizing one more unit of a variable input, holding all other inputs constant. MP is crucial in decision making, as it helps businesses understand the benefits of increasing inputs.
Understanding Diminishing Marginal Productivity
Diminishing marginal productivity is an economic principle that states as additional units of a variable input are added to fixed inputs, the added output from each new unit will eventually decrease. This reflects practical limits in the production process, such as limited machinery efficiency or crowded working conditions affecting output beyond a certain point.