In the long-run, there is no fixed factor; all factors are variable. The laws of returns to scale explain the relationship between output and the scale of inputs in the long-run when all the inputs are increased in the same proportion.
Assumptions:
(i) All the factors of production (such as land, labour and capital) are variable but organization is fixed.
(ii) There is no change in technology.
(iii) There is perfect competition in the market.
(iv) Outputs or returns are measured in physical quantities.
Three phases of returns to scale:
(i) Increasing returns to scale
(ii) Constant returns to scale
(iii) Diminishing returns to scale.

Bohm - Bawerk defines it as "a Produced means of Production". All capital is wealth but all wealth is not capital.
Characteristics of Capital
i) is a man-made factor.
ii) Capital is mobile between places and persons.
iii) Capital is a passive factor of production.
iv) Capital's supply is elastic.
v) Capital's demand is a derived demand.
vi) Capital is durable.

(i) An Iso quant map has different iso quant curves representing the different combinations of two factors yielding different levels of output.
(ii) An Iso quant is a family of iso quant
(iii) More than one iso quant is called Iso quant map.

(iv) Higher the Iso quant denotes higher level of output and lower the Iso quant denotes lower level of output.

(i) Charles Cobb and Paul Douglas have given a linear homogeneous production function.
(ii) A proportionate increase in the factors leads to a proportionate increase in output.
(iii) There is constant returns to scale with only labour and capital.
(iv) The elasticity of substitution between the factors is one.
Q = AL^{\(\alpha \)}K^{\(\beta \)}
Q = output; A = positive constant; K = Capital; L = Labour, \(\alpha \) + \(\beta \) = 1

Producer's equilibrium happens when there is maximum output with minimum cost ie. optimum combination of the factors of production.
The two conditions to be fulfilled are
1. The iso-cost line must be tangent to iso-quant curve.
2. At the point of tangency, iso-quant must be convex and MRTS_LK must be declining.

3. The producer is in equilibrium at E.
Slope of iso-quant curve = Slope of iso-cost curve.

Relationship among Total, Average and Marginal Products.

Stages	Total Product	Marginal Product	Average Product
Stage - I	It increases at an increasing rate. Then it increases at a decreasing rate. This is the point of inflexion.	It increases, reaches maximum and starts to decrease.	It increases, reaches maximum.
Stage - II	It continues to increase at a diminishing rate and reaches maximum	It continues to diminish and becomes zero.	It is equal to MP then begins to diminish.
Stage - III	It diminishes.	It becomes negative.	It diminishes but always greater than zero (positive)

(i) Elasticity of supply is the degree of responsiveness of change in supply to change in price on the part of sellers.
(ii) There are 5 types of elasticity of supply:
1. Relatively elastic supply
2. Relatively inelastic supply
3. Unitary elastic supply
4. Perfectly elastic supply
5. Perfectly inelastic supply
(iii) The factors governing elasticity of supply are the nature of the commodity, cost of production, technical condition & time factor.

Initiation: He considers the situation and availability of resources and plans the process of production.
Innovation: He introduces new methods in the production process.
Co-ordination: He uses a particular combination of the factors of production.
Control, direction & supervision: He directs the factors to get better results and supervises for the efficient functioning of all factors.
Risk taking, uncertainty bearing: Risk is insured, uncertainties cannot be insured.

Nature of the commodity:
(i) Durable goods can be stored for long till price increases so elasticity of supply is high.
(ii) Perishables have to be sold immediately, so elasticity of supply is low.
Cost of production:
When there is constant or increasing returns, supply increases so elasticity of supply is greater.
Technology:
In large-scale production with huge capital investment supply cannot be adjusted easily, so elasticity of supply is less.
Time factor:
During very short period, supply cannot be adjusted, so elasticity of supply is very low.

Land is a primary factor of production.
1. It is a passive factor.
2. It is a free gift of nature.
3. It has no cost of production.
4. Its supply is inelastic.
5. It is permanent. 
6. It is immovable.
7. It is heterogeneous.
8. The fertility differs.
9. It has alternative uses.
10. It faces law of diminishing returns.