Google
Sunday 
May 19, 2024 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
PARETO EFFICIENCY: A type of efficiency that results if one person can not be made better off without making someone else worse off. Named after Vilfredo Pareto, this criterion is the guiding theoretical notion of efficiency used in the study of economics, especially welfare economics. Pareto efficiency is generally not attained if some resources are idle or unemployed. By engaging idle resources in production, some people can have more production without reducing that available to others. A problem with Pareto efficiency, however, is that it is based on the existing distribution of income and wealth. This is one of two noted efficiency criteria used in economics. The other is Kaldor-Hicks efficiency.

Visit the GLOSS*arama


PRODUCTION FUNCTION:

A mathematical relation between the production of a good or service and the inputs used. A production function captures the general relation between total production and one or more inputs. The standard production function includes labor and capital as the inputs. However, a production function is general enough that any number of inputs can be included
A production function provides an abstract mathematical representation of the relation between the production of a good and the inputs used. A production function is usually expressed in this general form:

Q=f(L, K)

where: Q = quantity of production or output, L = quantity of labor input, and K = quantity of capital input. The letter "f" indicates a generic, as of yet unspecified, functional equation.

The analysis of short-run production is commonly performed at the introductory level with simple tables and graphs. These are useful abstraction methods for isolating and analyzing key aspects of short-run production. However, mathematical equations are another, often more powerful, method of abstract analysis. This is where the production function comes into play. Because a mathematical equation can extend beyond the two dimensions of a graph, it is possible to consider relations beyond just that for a variable input and total production.

If the production function takes the form of a specific equation (such as Q = 5L + 10K + 2LK), then a total product curve relating total product and the variable input can be plotted. However, to do so, one of the two inputs (L or K) must be designated as a variable input and one designated as a fixed input. For most types of production, labor is more readily changed than capital, so L is generally the variable input and K is usually the fixed input. A short-run total product curve can then be derived by "fixing" K at a particular value, then plotting the values of Q for alternative values of L.

While a great deal of economic insight into short-run production decisions of a firm and market supply curves can be analyzed with a simple graph, when economists begin using mathematical equations, such as the production function, Q = f(L, K), the possibilities are almost unlimited. A wide assortment of additional input variables can be added to this equation to make it, not only more sophisticated, but also more revealing.

For example, the effect of education and human capital on production can be seen by adding the educational attainment of workers as another input variable. In addition, the alternative impact on production of different types of capital, such as fixed structures and equipment can be identified by separating capital into two variables. In addition, to identify how public infrastructure, like highways and streets, affects production, then a variable for this input can be added to the production function.

<= PRODUCTION COSTPRODUCTION INPUTS =>


Recommended Citation:

PRODUCTION FUNCTION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: May 19, 2024].


Check Out These Related Terms...

     | short-run production analysis | production inputs | production time periods | total product | marginal product | average product | law of diminishing marginal returns | marginal returns | production stages |


Or For A Little Background...

     | production | production cost | abstraction | variables | labor | capital | law of supply | supply | principle | business | economic analysis | marginal analysis | factors of production | microeconomics |


And For Further Study...

     | long-run production analysis | division of labor | production possibilities | total product and marginal product | total product and average product | average product and marginal product | total cost | marginal cost | average cost |


Search Again?

Back to the WEB*pedia


APLS

PINK FADFLY
[What's This?]

Today, you are likely to spend a great deal of time searching for rummage sales wanting to buy either a packet of address labels large enough for addresses of both the sender and the recipient or a key chain with a built-in flashlight and panic button. Be on the lookout for deranged pelicans.
Your Complete Scope

This isn't me! What am I?

Al Capone's business card said he was a used furniture dealer.
"The only place success comes before work is in the dictionary. "

-- Vince Lombardi

WIPO
World Intellectual Property Organization
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2024 AmosWEB*LLC
Send comments or questions to: WebMaster