In microeconomics and macroeconomics, a production function is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. This function is an assumed technological relationship, based on the current state of engineering knowledge; it does not represent the result of economic choices, but rather is an externally given entity that influences economic decision-making. Almost all economic theories presuppose a production function, either on the firm level or the aggregate level. In this sense, the production function is one of the key concepts of mainstream neoclassical theories. Some non-mainstream economists, however, reject the very concept of an aggregate production function. Q=A.L^a.K^b.Kf^1-a-b where Kf is foreign investment.
Read more about Production Function: Concept of Production Functions, Specifying The Production Function, Production Function As A Graph, Stages of Production, Shifting A Production Function, Homogeneous and Homothetic Production Functions, Aggregate Production Functions, Criticisms of Production Functions
Famous quotes containing the words production and/or function:
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