What is Production Function?
The production function of an enterprise is an association between inputs utilised and output manufactured by an enterprise. For various quantities of inputs utilised, it gives the utmost quantity of output that can be manufactured.
Contemplate the farmer is mentioned in the introduction to the concept Production And Costs. Let us presume that the farmer utilises only 2 inputs to manufacture rice: labour and land. A production function explains us the utmost quantity of rice he can manufacture for a provided amount of land that he utilises and a given number of hours of labour that he performs. Suppose that he uses 2 hours of labour per day and 1 hectare of land to manufacture an utmost of 2 tonnes of rice. Then, a function that explains this association is called a ‘Production Function’. One feasible instance of the form this could take is: q = K × L, Whereas, q is the amount of rice manufactured, K is the area of land in hectares, L is the number of hours of work performed in a day.
A production function is elucidated for a provided technology. It is the technological knowledge that regulates the utmost degrees of output that can be manufactured using various combinations of inputs. If the technology enhances, the utmost levels of output achievable for different input combinations go up. We now have a new production function.
The inputs that an enterprise utilises in the production procedure are called as factors of production. In order to manufacture output, a firm may require any amount of different inputs. Let us contemplate a firm that manufactures output using only 2 factors of production –
Production function, explains the utmost quantity of output (q) that can be manufactured by using different combinations of these 2 factors of production Labour (L) and Capital (K).
We can write the production function as :
q = f (L,K)
whereas, L is labour and K is capital and q is the utmost output that can be manufactured.
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