PRODUCTION FUNCTION-EXPLAINED

Production Function:: 

Production involves a series of activities that convert the inputs into outputs that people can use for the fulfillment of their needs. Production is the transformation of inputs into output. Input is anything that is utilized in the creation of a commodity and Output is something that gets produced at the end of the production process. The relationship between inputs and outputs is defined using Production Function.

What is Production Function?

Production Function is the relationship between physical inputs (land, labour, capital, etc.) and physical outputs (quantity produced). It is a technical relationship (not an economic relationship) that studies material inputs on one hand and material outputs on the other hand. Material inputs include variable and fixed factors of production.

Algebric or Mathematical Function:

 In a standard equation, the Production function is represented by Q, Labour (Variable element) is represented by L, and Capital (Fixed element) is represented by K.

 Q = f(L,K)

 Assumptions of Production Function:

  1)Both inputs and outputs are divisible.

 2)There are only two factors of production, i.e., land (Variable element) and capital (Fixed  element).

 3)Factors of production are imperfect substitutes.

 4)Technology is constant.