Production Function
A production function is an economic concept that describes the relationship between the inputs used in the production process and the output of goods and services. It is a mathematical equation that shows the maximum output that can be produced from a given set of inputs. The production function is used to analyze the efficiency of production and to determine the optimal combination of inputs to produce the desired output. It is also used to measure the productivity of a firm or industry.
History of the Term
The concept of a production function was first developed by the French economist Jean-Baptiste Say in the early 19th century. Say argued that the production of goods and services was a function of the inputs used in the production process. He proposed that the maximum output of a given set of inputs could be determined by the production function. This concept was further developed by the English economist Alfred Marshall in the late 19th century. Marshall argued that the production function could be used to measure the productivity of a firm or industry.
Comparisons
| Inputs | Output |
|---|---|
| Labor | 100 units |
| Capital | 200 units |
| Land | 300 units |
Summary
The production function is an economic concept that describes the relationship between the inputs used in the production process and the output of goods and services. It is a mathematical equation that shows the maximum output that can be produced from a given set of inputs. The production function is used to analyze the efficiency of production and to determine the optimal combination of inputs to produce the desired output. For more information about this term, you can visit websites such as Investopedia, The Balance, and Economics Online.
See Also
- Marginal Productivity
- Average Productivity
- Total Productivity
- Marginal Cost
- Average Cost
- Total Cost
- Marginal Revenue
- Average Revenue
- Total Revenue
- Cost-Benefit Analysis
