Question

b.   The production function.
   i.   What is the production function?
   ii.   What questions does it help a business answer?
   iii.   How would you approach defining your company production function?
   iv.   What information would you need?
   v.   Where would you get that info?
c. Short
   i.   List and explain the 3 Short Run Production Relationships discussed in the slides and audio.
   ii.   Explain who in a business would care about them and how they might be used.

Answer 1

31, A production function formalises the relationship between the quantity of output yielded by a productive process and the quantities of various inputs used in that process. The relationship between physical inputs and physical outputs of a firm is generally referred to as the production function.

2. The production function can be classified under two heads1, Fixed proportion Production function and Variable Proportions Production Function. Under the former the productive factors are combined together in certain fixed proportions. Under the latter, the proportions in which the productive factors are employed can be varied to produce the same level of output.

3. Q=kL^​ac^​(1-n) ​where Q is the level of output, L is the quantity of Labour, c is the quantity of capital employed and k and a are positive constraints

4. The costs of various factors of production per unit of a commodity is derived from the particular production function under which it is being produced. A larger flow of output resulting from a particualr dose of inputs will lower down the cost of production and vice versa.