 Dear learners, I welcome you all to my class on theory of production. So in this class basically we will discuss about production function, the functional relationship between input and output, production function in the short wrap as well as in the long run. Then we will discuss what is iso-con, then properties or characteristics of iso-con. Let me define what is production. Production is the process in which economic resources or inputs are combined to create economic goods and services or output. As for example, in the production of a table, several inputs are required such as labor, raw materials, tools and equipment acceptor. So these inputs are combined in a particular manner as defined by the technology to produce the given output. Now whenever we are talking about production function, it basically describe the relation between physical quantities of inputs and physical quantity of output. What if given a state of technology, the production function shows the maximum amount of output attainable with a given level of input. So it does shows the functional relationship between inputs and output. If x1, x2, dot, dot, dot, xn are the quantities of input and q is the maximum attainable output, then the production function can be written as q is a function of the input used such as x1, x2, dot, dot, dot, xn. Now the general mathematical form of a production function is q is a function of labor, capital, raw materials, land input, return to scale parameter and efficiency parameter. Now in case of production function, all variables in the production function are flow variables and are measured per unit of time. Since raw materials bears a constant relation to output at all levels of production, hence if output is measured in terms of value added, that is the value of the raw materials can be deducted from the value of the output and the variable r can be excluded from the production function. Likewise, land input as is constant for an economy as a whole and hence we may not enter the aggregate production function. Thus if we exclude these two variables, ultimately the production function in a traditional economic theory assumes the form as q is a function of labor, capital, return to scale parameter and efficiency parameter. And symbolically what we can call it as, what we can term is that q is a function of lk small n n a. Now the return to scale parameter that is n refers to the long run analysis of the laws of production and the efficiency parameter refers to the entrepreneurial or organizational aspect of production. Graphically, how we can represent a production function? Graphically, a production function is presented on a curve on a basically two dimensional graph. Senses in the relevant variables are basically shown either by moment along the curve that depicts the production function or by shift of this curve. Now, whenever you are explaining production function, it can be explained in case of short run or it can be explained in case of long run. So, there are basic differences between short run, production function and long run production function. So, we will start with production function in the short run which is also known as the law of variable proportion. In economic theory, as I have already told you, you know, a distinction is made between the short run and long run. The short run is a time period when it is not possible to increase the supply of certain factors, especially the fixed factors. So, accordingly, senses in output camp come about only through changes in the supply of variable factor. The behavior of the production function in the short run is governed by the law of diminishing return and is also known as law of variable proportion or return to a factor. The supply of fixed factor, you know, remaining constant in the short run, you know, as a result, you know, the production function taking the formula Q is a function of labor and capital. Now, what if when, as in the short run, some of the factors are constant, the total product, the shape of the total product is an increasing function of labor input. That is, as labor increases, the total output also increases. Now, total output, basically what happens, total output initially increases at an increasing rate. This is because for a given amount of capital, as labor input increases, the productivity of both the factor increase, and this leads to total product increasing at an increasing rate initially. But for a given amount of capital input, as labor input increases further, what it results, it results in a fall in the productivity of the inputs. And as a result, total product increases at a decreasing rate. Now, in case of long run, the long run is a period where it is possible to increase the supply of all the factors as and when required. Thus, all factors of production become variable in the long run. So, you know, in our production, you know, in case, in our production function in the long run, both labor and capital are variable inputs. And accordingly, increasing output can become about throw and increase in all the factors in case of long run. Next, we will discuss about isoquant. Now, what is isoquant? You know, to represent the long run production function, you know, graphically in the, we used to the technique of isoquant. Now, how can we define isoquant? The isoquant is a curve which shows different combination of capital and labor producing the same level of output. So, obviously, you know, to show different level of output, we draw defined isoquant, and that is represented by isoquant map. So, if you see the figures, the figure 1 shows, you know, a isoquant representing defined combination of capital and labor. And the figure 2 shows, you know, isoquant map, it contains defined isoquant, you know, representing different levels of output. Now, we will discuss about what are the basic properties of isoquant. The first property of isoquant is that, you know, isoquants are downward sloping from left to right. So, why is it so? Because as one input increases, the other must be reduced so as to get the same level of output. And that is why, you know, isoquants are always downward sloping from left to the right. The second important property of isoquant is that isoquants are convex to the origin. The convexity of the isoquant arises on account of diminishing marginal rate of technical substitution. Now, what is, you know, what is marginal rate of technical substitution? The marginal rate of technical substitution is the rate at which one input is substituted for the other, keeping the output, you know, keeping the output same. Now, what you can, you know, you can also see, you know, the other possibilities. So, what happened if, you know, the marginal rate of technical substitution increases? Now, if marginal rate of technical substitution increases, the isoquant will become concave to the origin. And if, you know, marginal rate of technical substitution, you know, will remain constant to what will happen, the isoquant will take the shape of a downward sloping straight line. So, the convexity of the isoquant is basically determined by the nature of the marginal rate of technical substitution. So, as I have already told, you know, since there is a diminishing marginal rate of technical substitution, and as a result, the isoquants are always convex to the origin. The third important property of isoquant is that no two isoquants can intersect each other. So, why? Because if two isoquants intersect each other, it would mean that, you know, in that particular point where these two isoquant intersect each other, same amount of labour and capital is producing, you know, same amount of labour and capital will produce, you know, two different level of output. So, which is basically contradictory. So, as a result, you know, we can easily say that, you know, no two isoquant can intersect each other. Next, another important property of isoquant is that, you know, higher level of output are represented by higher level of isoquant. So, the, you know, isoquant, which is, you know, represents a higher level of output is always placed at the higher level as compared to a isoquant, which represents a lower level of output. So, this is, you know, the fourth property of isoquant. So, these are the things we have, you know, discussed in this class. Basically, initially, we try to define what is production. Then we try to explain, you know, what is the relations between input and output in case of production function. Then we try to explain the nature of the relationship both in the short run as well as in the long run. Then we explain what are the basic properties of isoquant. So, thank you for, you know, attending this class or, you know, see this class where we basically explains the initial part of the production function. Thank you.