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    Production Function

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    Abhijit1781989
    The document defines production as the creation of output using scarce resources. It discusses the production function, which explains the relationship between the maximum output that can be produced from given amounts of inputs like labor and capital for a given technology. It provides an example production function of Q=f(K,L) where Q is output and K and L are capital and labor. It also discusses concepts like average product, marginal product, and the Cobb-Douglas production function formula.

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    Production Function

    Uploaded by

    Abhijit1781989
    2K views12 pages
    The document defines production as the creation of output using scarce resources. It discusses the production function, which explains the relationship between the maximum output that can be produced from given amounts of inputs like labor and capital for a given technology. It provides an example production function of Q=f(K,L) where Q is output and K and L are capital and labor. It also discusses concepts like average product, marginal product, and the Cobb-Douglas production function formula.

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    Abhijit

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    The document defines production as the creation of output using scarce resources. It discusses the production function, which explains the relationship between the maximum output that can be produced from given amounts of inputs like labor and capital for a given technology. It provides an example production function of Q=f(K,L) where Q is output and K and L are capital and labor. It also discusses concepts like average product, marginal product, and the Cobb-Douglas production function formula.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    2K views12 pages

    Production Function

    Uploaded by

    Abhijit1781989
    The document defines production as the creation of output using scarce resources. It discusses the production function, which explains the relationship between the maximum output that can be produced from given amounts of inputs like labor and capital for a given technology. It provides an example production function of Q=f(K,L) where Q is output and K and L are capital and labor. It also discusses concepts like average product, marginal product, and the Cobb-Douglas production function formula.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 12

    PRODUCTION FUNCTION

    Production can be defined as the creation of output


    And includes any economic activity that uses
    scarce resources to create that output

    Production function
    The firm first has to decidewhat type of product it
    wants to produce . This can be decided only after
    taking stock of the resources available.
    Since the inputs and the costs of the different
    methods of production may vary , the firm must
    determine which method is most suitable with a
    given ability of resources and the firms financial
    condition

    Production function
    Input is defined as any good or services
    which contributes to the production of an
    output. Some of these inputs may be outputs
    to other firms.Ex the sugarcane produce by
    the farmersbecomes the input for the sugar
    mill.

    Transformation of inputs into


    outputs can be of three types
    Change in form (e.g. raw materials
    transformed to finished products)
    Change in space(e.g transportation)
    Change in time(e.g. Storage)

    Production function
    The production function explains relationship
    between the maximum quantity of output that can
    be produced from given amount of various inputs
    for a given technology
    Let us assume that the factors of production can
    be broadly categorised as labour(L)and capital
    ( K)
    Q=f(K,L)

    Concepts of product
    Units of
    labour
    1
    2
    3
    4
    5
    6
    7
    8
    9

    Total product
    75
    160

    255
    360
    430
    490
    505
    505
    492

    Marginal
    product
    75
    85
    95
    105
    70
    60
    15
    0
    -7

    Average
    product
    75
    80
    85
    90
    86
    82
    72
    63
    57

    Production function
    output

    Q=f(K,L)

    Labour &capital

    Production function
    Average product=total product/number of units
    of a factor employed
    Marginal product =change in output/change in
    input

    Cobb douglas function


    Q=AK L Where Q IS THE quantity of
    production, A=constant , K=CAPITAL
    INPUT,L=LABOUR INPUT

    Q=100K.5L.5
    RATE
    OF
    CAPIT
    AL
    INPUT

    Of
    1

    lab
    2

    our
    3

    In
    4

    Put
    5

    100

    141

    173

    200

    224

    245

    265

    283

    141

    200

    245

    283

    316

    346

    173

    245

    300

    346

    387

    424

    200

    283

    346

    400

    447

    490

    224

    316

    387

    447

    500

    548

    245

    346

    424

    490

    548

    600

    265

    374

    458

    529

    592

    648

    283

    400

    490

    565

    632

    693

    800

    Q=A KL
    FROM THE PRODUCTION TABLE
    141=A1

    inferences
    To choose between labour intensive and capital
    intensive
    If input rate is doubled output rate is also doubled
    If the one input is held constant and other
    changesoutput increases but the successive
    increments become smaller.

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