To study the production function we need the know about the production and factor of production first.
Production refers to the process of converting of inputs into outputs. Production uses resources to create a good or service that is suitable for exchange. Some economists define production broadly as all economic activity other than consumption. They see every commercial activity other than the final purchase as some form of production. (1. Internet - en.wikipedia.org)
Production is a process, and as such it occurs through time and space. Because it is a flow concept, production is measured as a “rate of output per period of time”. There are three aspects to production processes:
1. the quantity of the good or service produced,
2. the form of the good or service created,
3. the temporal and spatial distribution of the good or service produced.
A production process can be defined as any activity that increases the similarity between the pattern of demand for goods and services, and the quantity, form, and distribution of these goods and services available to the market place.
Factors of production
The inputs or resources used in the production process are called factors of production by economists. The myriad of possible inputs are usually grouped into six categories. These factors are: (1. Internet - en.wikipedia.org)
• Raw materials
• Capital goods
In the “long run”, all of these factors of production considered as variables. The “short run”, however, is defined as a period in which at least some of the factors of production are fixed.
A fixed factor of production is one whose quantity cannot readily be changed. Examples capital investments like machines, land etc.
A variable factor of production is one whose usage rate can be changed easily. Examples include electrical power consumption, labors, and most raw material inputs. The principle of...