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Production and cost — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsProduction and cost4 Marks
Question
Explain the concept of a production function.
✓

Answer

In simple words, production function refers to the functional relationship between the quantity of a good produced (output) and factors of production (inputs).
"The production function is purely a technical relation which connects factor inputs and output". Prof. Koutsoyiannis
Defined production function as "the relation between a firm’s physical production (output) and the material factors of production (inputs)". Prof. Watson
In this way, production function reflects how much output we can expect if we have so much of labour and so much of capital as well as of labour etc. In other words, we can say that production function is an indicator of the physical relationship between the inputs and output of a firm.
Production function is written as:
$Q_x = f(L, K)$
Where,
$Q_x$​​​​​​​ represents units of output x produced.
L represents units of labour employed.
K represents units of capital employed.
The above equation explains that $Q_x​​​​​​​$​​​​​​​ units of output x are produced by employing L and K units of labour and capital respectively and by a given technology. As the given level of technology appreciates, the output will increase with the same level of capital and labour units.

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