Production Theory

Production Theory

PRODUCTION:

Production is usually a method through which useful resource and power tend to be combined in the production area, actually a combination of raw materials and important ingredients and create services or products through these. Production objective is to combine various component and its particular implement. As an illustration, a farmer possesses few acres of land and plants seeds. Soon after a period of time he will get crops from his land or can say that this individual creates services or products via their land that’s named production.

In economics, production is regarded as a flow concept. It is an activity which is measured by the rate of output per unit time. Production underlies this formation involving utility.

PRODUCTION FUNCTION:

The work associated with output requires the particular transformation associated with inputs directly into production. This is a transformation associated with actual inputs directly into actual production. The production is usually so any function associated with variables which might be otherwise known as inputs. The well-designed connection involving actual inputs and actual production of the firm is termed production function. .Dependency relation between dependent and independent variables is also called production function. Mathematically, production function is,

Q= f (L,K)

Here, Q= Production or dependent variable, L= Labour, K= Capital, f= function and L and K are independent but flexible variables.

Without labor and capital production also depend on raw materials, land, efficiency, technology. For this concept, production function is,

Q= f (L,K,R,N,r,t)

Here, R= raw material, N= land, r= range of production, t= technology which is regarded as constant in production.

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