Concept of Production Functions
Production function shows the physical relationship between input and
output.
Production function shows how much output we can get if we have sufficient amount
of capital and labour. In production raw material converted into goods. Here
raw material can be anything depends upon the nature of business. The
aim of production is to maximize the profit, and to get the most profit with
least cost we need the best combinations of production factors.
Where, Q = f (KL)
Q = Output
K = capital
L = labour
Here output is depending upon the different inputs available in the
firm, here are only two inputs, Capital (k) and Labour (L). There can be many
factors that are responsible for the different output depends upon the nature
of firm.
No comments:
Post a Comment