Business, Economics

Production in Economics

Production in Economics

What is Production?

Production is the process of using labour, capital and other inputs to make goods and services. Input mean labour, capital, land entrepreneurship and natural resources that are combined to make outputs like cars, computers, wheat, rice or any other marketable goods or service. Thus production is a process of transforming inputs into outputs.

Production Function

The more output is needed, the more we require inputs to be used in the production process. This means that output depends on inputs. There is a relationship between outputs and inputs. This relationship is called production function. We can write

                                       Q = f (L,K,N,O,…..)

Where     Q = Output (Production)

                 L = Labour Inputs

                 K = Capital Inputs

                 N = Land

                 O = Organizational or Entrepreneurship

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