The production function expresses a functional relationship between quantities of inputs and out- puts. It shows how and to what extent output changes with variations in inputs during a specified period of time.
According to Stigler, "The production function is the name given to the relationship between rates of input of productive services and the rate of output of product. It is the economist's summary of technical knowledge.
Basically, the production function is a technological or engineering concept which can be expressed in the form of a table, graph and equation showing the amount of output obtained from various combinations of inputs used in production, given the state of technology. Algebraically, it may be ex- pressed in the form of an equation as:
where Ld = land and building; L = labour; K = capital; M = materials; T = technology; and, t = time.
For sake of convenience, economists have reduced the number of variables used in a production function to only two: capital (K) and labour (L). Therefore, in the analysis of input-output relations, the production function is expressed as
It is this form of production function which is most commonly used in production analysis
marto answered the question on
April 16, 2019 at 12:36