Production Function

Cobb-Douglas Production Function

In economics, a production function represents the relationship between the output and the combination of factors, or inputs, used to obtain it.


- Q is the quantity of products
- L the quantity of labor applied to the production of Q, for example, hours of labor in a month.
- K the hours of capital applied to the production of Q, for example, hours a machine has been working for the production of Q.

There can be other inputs, K and L are just examples.


Production Function

A production function is a relationship between outputs and a combination of factors used to obtain it.

Given a technology, a production function shows us that the quantity of a product Q that is obtainable by a business, is a function of the quantities of capital (K), labor (L), land (P) and business initiative (H), so that:

Q = f(K,L,P,H)

If we consider only one input:

production function