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Chapter 7: Q 12. (page 184)

What is a production function?

Short Answer

Expert verified

The production function is a mathematical expression that illustrates the relation between output and inputs required for producing the output through a mathematical equation.

Step by step solution

01

Step 1. Production function

Any production process requires inputs for producing output. Inputs are also termed as factors of production. These factors of production can be categorized into five components: natural resources (N), labor (L), capital (K), technology (t), entrepreneurship (E). Combinations of these inputs result in output. Production function summarizes the mechanism of use of varieties combinations of inputs to produce a certain amount of output through a mathematical expression.

02

Step 2. The mathematical expression of the production function

A production function is actually a mathematical expression that reveals the relationship between output and inputs, that is, the output is a function of inputs required for producing the output. If we consider an output (Q) as a function of all the factors of production mentioned above, then the production function for output Q can be written as,

Q = f(N, L, K, t, E)

The production function is generally product-specific. The production function for a specific product includes only those inputs required for the production of the product.

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