Scribd
Upload
35 views

Imp PRD Fun

1. A production function expresses the relationship between physical inputs and outputs of a firm over a period of time. 2. It helps estimate optimal production levels and input substitutions to achieve a given output. 3. The production function considers relationships like variable input proportions and returns to scale, explaining how output changes as inputs change in the short and long-run.

Uploaded by

Akarsh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
35 views

Imp PRD Fun

1. A production function expresses the relationship between physical inputs and outputs of a firm over a period of time. 2. It helps estimate optimal production levels and input substitutions to achieve a given output. 3. The production function considers relationships like variable input proportions and returns to scale, explaining how output changes as inputs change in the short and long-run.

Uploaded by

Akarsh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

Importance of Production function

The production function expresses a functional relationship between


physical inputs and physical outputs of a firm at any particular time
period. . Importance: 1. When inputs are specified in physical units,
production function helps to estimate the level of production. 2. It
becomes is equates when different combinations of inputs yield the
same level of output. 3. It indicates the manner in which the firm can
substitute on input for another without altering the total output. 4.
When price is taken into consideration, the production function helps
to select the least combination of inputs for the desired output. 5. It
considers two types’ input-output relationships namely ‘law of variable
proportions’ and ‘law of returns to scale’. Law of variable propositions
explains the pattern of output in the short-run as the units of variable
inputs are increased to increase the output. On the other hand law of
returns to scale explains the pattern of output in the long run as all the
units of inputs are increased. 6. The production function explains the
maximum quantity of output, which can be produced, from any
chosen quantities of various inputs or the minimum quantities of
various inputs that are required to produce a given quantity of output.
Production function can be fitted the particular firm or industry or for
the economy as whole. Production function will change with an
improvement in technology. Assumptions:. 1. The production
function is related to a particular period of time. 2. There is no change
in technology. 3. The producer is using the best techniques available.
Cobb-Douglas production function: Production function of the linear
homogenous type is invested by Junt wicksell and first tested by C. W. Cobb
and P. H. Dougles in 1928,Y= (AKX L1-x) Where Y=output K=Capital L=Labour
A, ∞=positive constant Assumptions: It has the following assumptions 1. The
function assumes that output is the function of two factors viz. capital and
labour. 2. It is a linear homogenous production function of the first degree 3.
The function assumes that the logarithm of the total output of the economy is a
linear function of the logarithms of the labour force and capital stock. 4. There
are constant returns to scale 5. All inputs are homogenous .

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy