Production function
Topic: Production Function, Returns and Costs · NCERT: Class 12, Ch 3 "Production and Costs"
Meaning
A production function shows the maximum output a firm can produce from each combination of inputs. It is written q = f(L, K), where q is output, L is labour and K is capital (machines, tools, buildings). It holds for a given technology. If technology improves, the maximum output for each input mix rises, and we get a new production function. Because it records the maximum, it assumes the firm uses its inputs efficiently.
Example
In the NCERT farmer's case, q = K × L. With 2 units of land-capital and 3 workers, output is 6. If either input is zero, output is zero, so both inputs are essential. In the linear form Q = 5L + 2K, output is 20 even with L = 0 and K = 10, because the inputs can fully replace each other.
Don't confuse with
- Cost function: the production function links inputs to output. The cost function gives the least cost of producing each output level.