Microeconomics Production Theory

Topics: Economics, Economics of production, Output Pages: 4 (1246 words) Published: October 16, 2012
3.2 PRODUCTION FUNCTION OR INPUT-OUTPUT RELATIONSHIP SHORT RUN AND LONG RUN PRODUCTION FUNCTION Production function may be defined as the functional relationship between physical inputs that’s factors of production (land, labour etc) and physical outputs that is quantity of goods produced. Thus the production function expresses the relationship between quantity of output and the quantities of various inputs used in production. The physical relationship between a firm’s physical input and output depends on a given state of technological knowledge. Production function shows the maximum amount of output that can be produced from a given set of input in the existing set of inputs in the existing state of technologie.the output will change when the quantity of any input is change. In real life a manufacture wants to know how much of the various factors or inputs that is land, natural resources,labour and capital will be required to produce a unit or a given quantity of a commodity during a given period of time. It is necessary for him (manufacture) to know this so that he may be able not only to asset his requirements of productive services but also roughly to estimate probable cost. Since production function is concerned with physical aspects of production, it is more a concern of an engineer or a technitation than of an economist. Only a techniqation can say what specific quantity of a good can be produced by the use of various productive resources and their combinations. Production function depends upon:

a. Quantity of resources used
b. State of technical knowledge
c. Possible processes
d. Size of the firms
e. Natural of firms and organizations
f. Relatitive prices of factors of production
As these things change production function will change to.e.g output can be increased by increasing the quantity of factors of production or of some of them. Adoption of more efficient techniques of production will add to the output. The less efficient...
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