1 hat is a production function Write an equation for a typic

#1 hat is a production function? Write an equation for a typical production function, and explain what each of the six terms represent. (7 points)

Solution

Ans.

Production function relates physical output of a production process to physical inputs or factors of production. It is a mathematical function that relates maximum amount of output that can be obtained from given number of inputs like capital and labour.In other words, mathematically it represents relation between quantity of inputs used in production and quantity of output produced using inputs.

A typical production function is written as ,

Y = A F ( L,K,H,N )

Where Y denotes quantity of output produced using the inputs

L is the quantity of labour input

K is the quantity of physical capital

H denotes quantity of human capital  

N represents quantity of natural resources

and A is a variable that reflects about the available production technology