What is production?

Production is a process by which various inputs are combined and transformed into output of goods and services, which are demanded in the market. It is a very important and broader concept in economics. To meet the daily demand of a consumer production is essential part.

In other words, it is a process of combining various material inputs and immaterial inputs in order to make something for consumption. The essences are the creation of utilities and the transformation of inputs or resources into output.

Inputs are the resources used in the production of goods and services namely land, labour, capital, and entrepreneur. https://en.wikipedia.org/wiki/Factors_of_production

What is the production function?

The functional relationship between the physical input (or factor of production) and therefore the output is named a production function. It assumed the input as an explanatory or independent variable and the output as a dependent variable. Mathematically, you can write this as:

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Q=f(L,K)

Where”Q”represents the output,”L”and”K” are the inputs, respectively, labour and capital (such as machinery). Note that there may be many other factors, but we are assuming a two-factor input here

Inputs that change directly with the output are called variable factors. These are factors that can change. Fluctuating factors exist both in the short term and in the long term. Examples of variable factors include daily labour and raw materials.

On the other hand, factors that cannot change or change as https://slot88ku-link.one/ the output changes are called fixed factors. These factors are usually characteristic only for a short or short period of time. There are no fixed factors in the long term.

Types

Short run production function: The short run is defined as the period during which at least one of the input is fixed. According to the following, labour is the only variable factor input while the rest of the inputs are regarded as fixed.

Long run production function: It is defined as the period of time in which all factors are variable. In the long run there is no distinction between the fixed or variable factor as all factors in the long run are variable.

It can also be classified on the basis of factor proportion which are as below:

1. Fixed proportion production function: It is also known as a Leontief Production Function which implies the fixed factors of production function such as land, labour, raw materials are used to produce a fixed quantity of an output and these factors cannot be substituted for the other factors.
   
   In other words, in such factors, fixed quantity of inputs is used to produce the fixed quantity of output. All factors are fixed and cannot be substituted for one another.
   
2. Variable proportion production function: This function supposes that the ratio in which the factors such as labour and capital are used in a variable proportion. Also, the different combinations of factors can be used to produce the given quantity, thus, one factor can be substituted for the other factor.
   
   In the case of variable proportion, the technical Coefficient of production function is variable, i.e. the important quantity of output can be achieved through the combination of different quantities of factors, such as these factors can be varied by substituting one factors to the other/ factors in its place.