"Synonymous to the demand theory that pivots around the concept of the demand function, the theory of production revolves around the concept of the production function. A production function can be an equation, table or graph presenting the maximum amount of a commodity that a firm can produce from a given set of inputs during a period of time. The concept of production function portrays the ways in which the factors of production are combined by a firm to produce different levels of output. More specifically, it shows the maximum volume of physical output available from a given set of inputs or the minimum set of inputs necessary to produce any given level of output.
The production function comprises an engineering or technical relation, because the relation between inputs and outputs is a technical one. The production function is determined by a given state of technology. When the technology improves the production function changes, because the new production function can yield greater output from the given inputs or smaller inputs will be enough to produce a given level of output. Further, the production function incorporates the idea of efficiency. Thus, production function is not any relation between inputs and outputs, but a relation in which a given set of inputs produces a maximum output. Therefore, the production function includes all the technically efficient methods of producing an output. A method or process of production is a combination of inputs required for the production of output.
A method of production is technically efficient to any other method if it uses less of at least one factor and no more of the other factors as compared with another method. The production function can have various uses. It can be used to compute the least cost factor combination for a given output or the maximum output combination for a given cost. Knowledge of production function may be helpful in deciding on the value of employing a variable factor in the...
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