Economics

Definition: The Variable Proportion Production Function implies that the ratio in which the factors of production such as labor and capital are used is not fixed, and it is variable. Also, the different combinations of factors can be used to produce the given quantity, thus, one factor can be substituted for the other. In the case of variable proportion production function, … [Read more...] about Variable Proportion Production Function

Definition: The Fixed Proportion Production Function, also known as a Leontief Production Function implies that fixed factors of production such as land, labor, raw materials are used to produce a fixed quantity of an output and these production factors cannot be substituted for the other factors. In other words, fixed quantity of inputs is used to produce the fixed quantity … [Read more...] about Fixed Proportion Production Function

Definition: The Production Function shows the relationship between the quantity of output and the different quantities of inputs used in the production process. In other words, it means, the total output produced from the chosen quantity of various inputs. Generally, production is the transformation of raw material into the finished goods. These raw materials are classified … [Read more...] about Production Function