Monday, August 24, 2009
Production function may be defined as the functional relationship between physical inputs i.e. factor of production such as land labour, capital and organization and physical out puts i.e. the quantity of goods produced.
Thus the production function expresses the relationship between the quantity of output and quantities of various inputs used in production. The physical relationship between firms physical inputs and output depends on a given stage of technological knowledge, hence it is also called economists summary of technological knowledge.
Like demand production function refers to a period of time. Accordingly, it refers to a flow if inputs resulting in a flow of out put over a period of time leaving prices aside. It shows the maximum amount of output that can be produced from a given set of outputs in the existing stage of technology. The output will change when the quantity of any output is changed or minimum quantities of various inputs required to produce given quantity.
Since the production function is concerned with physical aspects of production, it is more concern of an engineer or a technician than of an economist.
Production function can be expressed as under
X = f (a,b,c,d….)Here X is the output of commodity per unit of time and a,b,c,d….. are the various productive resources which go into making of quantity of the commodity, f is function i.e. varying with. Tags: Macro Economics
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