Production functionGraph of total, average, and marginal productIn 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 mainstreamneoclassical theories, used to define marginal product and to distinguish allocative efficiency, a key focus of economics.
Cost curveIn economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, productively efficient firms optimize their production process by minimizing cost consistent with each possible level of production, and the result is a cost curve. Profit-maximizing firms use cost curves to decide output quantities.
List of production functionsThis 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).
Factors of productionIn economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilised amounts of the various inputs determine the quantity of output according to the relationship called the production function. There are four basicresources or factors of production: land, labour, capital and entrepreneur (or enterprise).
Homogeneous functionFunction with a multiplicative scaling behaviourIn mathematics, a homogeneous function is a function of several variables such that the following holds: If each of the function's arguments is multiplied by the same scalar, then the function's value is multiplied by some power of this scalar; the power is called the degree of homogeneity, or simply the degree.Diminishing returnsIn economics, diminishing returns means the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal (ceteris paribus).
EconomicsSocial science studying goods and servicesEuro coinsEconomics () is a social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyses what is viewed as the basic elements of economies, including individual agents and markets, their interactions, and the outcomes of those interactions.
Economies of scaleIn microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of cost (production cost). A decrease in cost per unit of output enables an increase in scale that is, increased production with lowered cost. The basis of economies of scale may be technical, statistical, organizational or related factors to the degree of market control.Generalized Ozaki cost functionIn economics the generalized-Ozaki (GO) cost function is a general description of the cost of production proposed by Shinichiro Nakamura. The GO cost function is notable for explicitly considering nonhomothetic technology, where the proportions of inputs can vary as the output changes. This stands in contrast to the standard production model, which assumes homothetic technology.
Cobb–Douglas production functionIn economics and econometrics, the Cobb–Douglas production function is a particular functional form of the production function, widely used to represent the relationship between the amounts of two or more inputs (particularly physical labor and capital) and the amount of output that can be produced by those inputs.
Marginal costIn economics, marginal cost (MC) is the change in the total cost that arises when the quantity produced is increased, i.e. the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it refers to the rate of change of total cost as output is increased by an infinitesimal amount. Marginal cost is different from average cost, which is the total cost divided by the number of units produced.Average costIn economics, average cost (AC) or unit cost is equal to total cost (TC) divided by the number of units of a good produced (the output Q): A C = T C Q . {\displaystyle AC={\frac {TC}{Q}}.} Average cost is an important factor in determining how businesses will choose to price their products.*As an Amazon Associate I earn from qualifying purchases.