Production function refers to the functional relationship between physical inputs and physical outputs of a commodity.
Concept of Production Function :
As we know, for producing output, we need inputs. Generally, the land, labour and capital are well known and well-organized inputs used for the production of goods and services.
Hence, The producer is always keen to know the number of inputs needed to produce a given quantity of a commodity. For instance, the producer may find that 20 units of capital and 10 units of labour are required to produce 200 units of a commodity. Thus, it is the relationship between physical inputs which are 20 units of capital and 10 units of labour and physical output which is 200 units of a commodity. In economics, it is known as the Production Function.
In other words, production function refers to the technological relation between a firm’s output/ production and the physical factors of production(inputs). It can be expressed as:
Qx = f(L,K)
Here,
Qx denotes Output/production of commodity
L denotes labour
K denotes capital
Therefore, production is a function of labour and capital. Using the values of the above example, we can write it as :
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