Production is concerned with the way in which resources or inputs such as land, labor, and machinery are employed to produce a firm’s product or output.

Production Function

Production function expresses the relationship between inputs and outputs.

Production function is an equation, a table, a graph, which express the relationship between inputs and outputs.

Production function explains that the maximum output of goods or services that can be produced by a firm in a specific time with a given amount of inputs or factors of production.

Production Function: Q = f (K, L)

We are producing Q quantities of goods by employing K capital and L labor.

Here
Q Represents quantity of goods

K Represents Capital employed

L Represents Labor employed

Assumptions for Production Function:

1. Technology is assumed to be constant.

2. It is related to a particular or specific period.

3. It is assumed that the manufacturer is using the best technology.

4. All inputs are divisible.

5. Utilization for inputs at maximum level of efficiency.


On the Cobb–Douglas Production Function