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:
“... if the production of any commodity necessitates the sacrifice of human life, society should do without that commodity, but it can not do without that life.”
—Emma Goldman (1869–1940)
“The fact remains that the human being in early childhood learns to consider one or the other aspect of bodily function as evil, shameful, or unsafe. There is not a culture which does not use a combination of these devils to develop, by way of counterpoint, its own style of faith, pride, certainty, and initiative.”
—Erik H. Erikson (1904–1994)