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A List Of Production Functions
This is a list of production functions that have been used in the economics literature. Production functions are a key part of modelling national output and national income. For a much more extensive discussion of various types of production functions and their properties, their relationships and origin, see Chambers (1988) and Sickles and Zelenyuk (2019, Chapter 6). The production functions listed below, and their properties are shown for the case of two factors of production, capital (K), and labor (L), mostly for heuristic purposes. These functions and their properties are easily generalizable to include additional factors of production (like land, natural resources, entrepreneurship, etc.) Technology There are three common ways to incorporate technology (or the efficiency with which factors of production are used) into a production function (here ''A'' is a scale factor, ''F'' is a production function, and ''Y'' is the amount of physical output produced): * Hicks-neutral t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Production Function
In economics, a production function gives the technological relation between quantities of physical inputs and quantities of output of goods. The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency, a key focus of economics. One important purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors, while abstracting away from the technological problems of achieving technical efficiency, as an engineer or professional manager might understand it. For modelling the case of many outputs and many inputs, researchers often use the so-called Shephard's distance functions or, alternatively, directional distance functions, which are generalizations of the simple production function in economics. In macroeconomics, aggregate production functions are estimated to create a fram ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Returns To Scale
In economics, returns to scale describe what happens to long-run returns as the scale of production increases, when all input levels including physical capital usage are variable (able to be set by the firm). The concept of returns to scale arises in the context of a firm's production function. It explains the long-run linkage of the rate of increase in output (production) relative to associated increases in the inputs (factors of production). In the long run, all factors of production are variable and subject to change in response to a given increase in production scale. While economies of scale show the effect of an increased output level on unit costs, returns to scale focus only on the relation between input and output quantities. There are three possible types of returns to scale: increasing returns to scale, constant returns to scale, and diminishing (or decreasing) returns to scale. If output increases by the same proportional change as all inputs change then there are cons ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Stone–Geary Utility Function
The Stone–Geary utility function takes the form :U = \prod_ (q_i-\gamma_i)^ where U is utility, q_i is consumption of good i, and \beta and \gamma are parameters. For \gamma_i = 0, the Stone–Geary function reduces to the generalised Cobb–Douglas function. The Stone–Geary utility function gives rise to the Linear Expenditure System. In case of \sum_i \beta_i =1 the demand function equals :q_i = \gamma_i + \frac (y - \sum_j \gamma_j p_j) where y is total expenditure, and p_i is the price of good i. The Stone–Geary utility function was first derived by Roy C. Geary, in a comment on earlier work by Lawrence Klein and Herman Rubin. Richard Stone Sir John Richard Nicholas Stone (30 August 1913 – 6 December 1991) was an eminent British economist, educated at Westminster School and Gonville and Caius College and King's College at the University of Cambridge. In 1984, he was awarded t ... was the first to estimate the Linear Expenditure System. References Further ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Taylor Series
In mathematics, the Taylor series or Taylor expansion of a function is an infinite sum of terms that are expressed in terms of the function's derivatives at a single point. For most common functions, the function and the sum of its Taylor series are equal near this point. Taylor series are named after Brook Taylor, who introduced them in 1715. A Taylor series is also called a Maclaurin series, when 0 is the point where the derivatives are considered, after Colin Maclaurin, who made extensive use of this special case of Taylor series in the mid-18th century. The partial sum formed by the first terms of a Taylor series is a polynomial of degree that is called the th Taylor polynomial of the function. Taylor polynomials are approximations of a function, which become generally better as increases. Taylor's theorem gives quantitative estimates on the error introduced by the use of such approximations. If the Taylor series of a function is convergent, its sum is the limit of the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Leontief Production Function
In economics, the Leontief production function or fixed proportions production function is a production function that implies the factors of production which will be used in fixed (technologically pre-determined) proportions, as there is no substitutability between factors. It was named after Wassily Leontief and represents a limiting case of the constant elasticity of substitution production function. For the simple case of a good that is produced with two inputs, the function is of the form :q = \text\left(\frac,\frac\right) where ''q'' is the quantity of output produced, ''z''1 and ''z''2 are the utilised quantities of input 1 and input 2 respectively, and ''a'' and ''b'' are technologically determined constants. Example Suppose that the intermediate goods "tires" and "steering wheels" are used in the production of automobiles (for simplicity of the example, to the exclusion of anything else). Then in the above formula ''q'' refers to the number of automobiles produced, ''z ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cobb–Douglas Production Function
In economics and econometrics, the Cobb–Douglas production function is a particular functional form of the production function, widely used to represent the technological relationship between the amounts of two or more inputs (particularly physical capital and labor) and the amount of output that can be produced by those inputs. The Cobb–Douglas form was developed and tested against statistical evidence by Charles Cobb and Paul Douglas between 1927 and 1947; according to Douglas, the functional form itself was developed earlier by Philip Wicksteed. Formulation In its most standard form for production of a single good with two factors, the function is : Y=AL^\beta K^\alpha where: * ''Y'' = total production (the real value of all goods produced in a year or 365.25 days) * ''L'' = labour input (person-hours worked in a year or 365.25 days) * ''K'' = capital input (a measure of all machinery, equipment, and buildings; the value of capital input divided by the price of capita ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Constant Elasticity Of Substitution
Constant elasticity of substitution (CES), in economics, is a property of some production functions and utility functions. Several economists have featured in the topic and have contributed in the final finding of the constant. They include Tom McKenzie, John Hicks and Joan Robinson. The vital economic element of the measure is that it provided the producer a clear picture of how to move between different modes or types of production. Specifically, it arises in a particular type of aggregator function which combines two or more types of consumption goods, or two or more types of production inputs into an aggregate quantity. This aggregator function exhibits constant elasticity of substitution. CES production function Despite having several factors of production in substitutability, the most common are the forms of elasticity of substitution. On the contrary of restricting direct empirical evaluation, the constant Elasticity of Substitution are simple to use and hence are widely u ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Isoquant
An isoquant (derived from quantity and the Greek word iso, meaning equal), in microeconomics, is a contour line drawn through the set of points at which the same quantity of output is produced while changing the quantities of two or more inputs. The x and y axis on an isoquant represent two relevant inputs, which are usually a factor of production such as labour, capital, land, or organisation. An isoquant may also be known as an “Iso-Product Curve”, or an “Equal Product Curve”. Isoquant vs. Indifference Curve While an indifference curve mapping helps to solve the utility-maximizing problem of consumers, the isoquant mapping deals with the cost-minimization and profit and output maximisation problem of producers. Indifference curves further differ to isoquants, in that they cannot offer a precise measurement of utility, only how it is relevant to a baseline. Whereas, from an isoquant, the product can be measured accurately in physical units, and it is known by exactly how ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interactions of Agent (economics), economic agents and how economy, economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and market (economics), markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on glossary of economics, these elements. Other broad distinctions within economics include those between positive economics, desc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Factors Of Production
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relationship called the production function. There are four ''basic'' resources or factors of production: land, labour, capital and entrepreneur (or enterprise). The factors are also frequently labeled "producer goods or services" to distinguish them from the goods or services purchased by consumers, which are frequently labeled "consumer goods". There are two types of factors: ''primary'' and ''secondary''. The previously mentioned primary factors are land, labour and capital. Materials and energy are considered secondary factors in classical economics because they are obtained from land, labour, and capital. The primary factors facilitate production but neither becomes part of the product (as with raw materials) nor becomes significantly tra ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Hicks-neutral Technical Change
Hicks-neutral technical change is change in the production function of a business or industry which satisfies certain economic neutrality conditions. The concept of Hicks neutrality was first put forth in 1932 by John Hicks in his book ''The Theory of Wages''. A change is considered to be Hicks neutral if the change does not affect the balance of labor and capital in the products' production function. More formally, given the Solow model production function :Y = A F(K,L) \,, a Hicks-neutral change is one which only changes A. See also *List of production functions This is a list of production functions that have been used in the economics literature. Production functions are a key part of modelling national output and national income. For a much more extensive discussion of various types of production funct ... References Further reading * * * * Production economics Technological change {{econ-stub ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
