March 21, 2018 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
GOVERNMENT SECURITIES: Financial instruments used by the federal government to borrow money. Government securities are issued by the U.S. Treasury to cover the federal government's budget deficit. Much like consumers who borrow money from banks to finance the purchase of a house or car, the federal government borrows money to finance some of its expenditures. These securities include small denomination ($25, $50, or $100), nonnegotiable Series EE savings bonds purchased by consumers. The really serious money, however, is borrowed using larger denomination securities ($100,000 or more) purchased by banks, corporations, foreign governments, and others with large sums of money to lend.

Visit the GLOSS*arama


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.


Recommended Citation:

PRODUCTION FUNCTION, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2018. [Accessed: March 21, 2018].

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


[What's This?]

Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius hoping to buy either a T-shirt commemorating the 2000 Olympics or a genuine fake plastic Tiffany lamp. Be on the lookout for malfunctioning pocket calculators.
Your Complete Scope

This isn't me! What am I?

A communal society, a prime component of Karl Marx's communist philosophy, was advocated by the Greek philosophy Plato.
"When the solution is simple, God is answering."

-- Albert Einstein

Intertemporal Capital Asset Pricing Model
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 ©2000-2018 AmosWEB*LLC
Send comments or questions to: WebMaster