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In economics, a production function gives the technological relation between quantities of physical inputs and quantities of output of goods. The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency, a key focus of economics.
production function: mathematical equation that tells how much output a firm can produce with given amounts of inputs short run: period of time during which at least one or more of the firm’s inputs is fixed variable inputs: factors of production that a firm can easily increase or decrease in a short period of time
Jul 17, 2023 · Define the production function. In economics, a production function relates physical output of a production process to physical inputs or factors of production. It is a mathematical function that relates the maximum amount of output that can be obtained from a given number of inputs – generally capital and labor.
Jun 24, 2023 · The production function is the mapping from inputs to an output or outputs. For the most part we will focus on two inputs in this section, although the analyses with more than inputs is “straightforward.” Example: The Cobb-Douglas production function is the product of each input, x, raised to a given power. It takes the form \(\begin ...
Oct 10, 2023 · The concept of production function is a fundamental element in economics that explains the relationship between inputs and outputs in the production process. It is a powerful tool that helps economists and businesses understand the efficiency and productivity of different production methods.
A production is purely an engineering concept. If you plug in the amount of labor, capital and other inputs the firm is using, the production function tells how much output will be produced by those inputs.
Consequently, we can define two production functions: short-run and long-run. The short-run production function defines the relationship between one variable factor (keeping all other factors fixed) and the output. The law of returns to a factor explains such a production function.
