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Production function shows
Technological relationship between inputs and output
Economic relationship between inputs and output
Technological relationship between inputs and cost
Technological relationship between inputs and price
Production function is an expression of the technological relation between physical inputs and output of a good. Symbolically: Ox = f i1, i2, i3…. in) {Where: Ox = Output of commodity x; f = Functional relationship; i1, i2, …. in = Inputs needed for Ox} Example of Production function: Suppose a firm is manufacturing chairs with the help of two inputs, say labour (L) and capital (K). Then, production function can be written as: OChairs = f (L, K) Production function defines the maximum chairs (OChairs ), which can be produced with the given capital and labour inputs. If production functions is expressed as: 250 = (7L, 2K). It means, 7 units of labour and 2 units of capital can produce maximum of 250 chairs.
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