Production Function

Production function:-

The production function expresses a functional relationship between quantities of inputs and outputs. It shows how and to what extent output changes with variations in inputs during a specified period of time. In the words of 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. Algebraically, it may be expressed in the form of an equation as
Q=f (L,M,N, К, T)…………. (1)
where Q stands for the output of a good per unit of time, L for labour, M for management (or organisation), N for land(or natural resources), К for capital and T for given technology, and F refers to the functional relationship. The production function with many inputs cannot be depicted on a diagram. Moreover, given the specific values of the various inputs, it becomes difficult to solve such a production function mathematically. Economists, therefore, use a two-input production function. If we take two inputs, labour and capital, the production function assumes the form
Q = f (L, K) ….(2)
The production function as determined by technical conditions of production is of two types:
It may be rigid ox flexible. The former relates to the short run and the latter to the long run.
The Nature of Production Function:
The production function depends upon the following factors:
(a) The quantities of inputs to be used.
(b) The state of technical knowledge.
(c) The possible processes of production.
(d) The size of the firm.
(e) The prices of inputs.
Now if these factors change the production function automatically changes.