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Home Laws of Returns Production Function

 

Production Function:

 

Definition:

 

A given output can be produced with many different combinations of factors of production (land, labor, capita! and organization) or inputs. The output, thus, is a function of inputs. The functional relationship that exists between physical inputs and physical output of a firm is called production function.

 

Formula:

 

In abstract term, it is written in the form of formula:

 

Q = f (x1, x2, ......., xn)

 

Q is the maximum quantity of output and x1, x2, xn are quantities of various inputs. The functional relationship between inputs and output is governed by the laws of returns.

 

The laws of returns are categorized into two types.

 

(i) The law of variable proportion seeking to analyze production in the short period.

 

(ii) The law of returns to scale seeking to analyze production in the long period.

Relevant Articles:

Production Function
Law of Variable Proportions

Law of Diminishing Returns

Law of Increasing Returns
Law of Constant Returns
Law of Costs
Law of Returns to Scale
 

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