Production function

Summary

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 framewo

Official source

https://en.wikipedia.org/wiki/Production_function

About this result

This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.

Related publications (5)

Related publications

Related people

Related units

Related concepts (15)

Related concepts

Related courses (13)

The course allows students to get familiarized with the basic tools and concepts of modern microeconomic analysis. Based on graphical reasoning and analytical calculus, it constantly links to real economic issues.

This class will provide students with an understanding of some real-world issues related to the "knowledge economy." Why should we innovate as a society? Why innovation doesn't just happen and how can the government help firms innovate? We will answer these questions and others using economic tools.

This course provides students with a working knowledge of macroeconomic models that explicitly incorporate financial markets. The goal is to develop a broad and analytical framework for analyzing the interaction of financial decisions, macroeconomic events and policy decisions.

Related courses

Related lectures (35)

Related lectures

Design of a resource allocation system to optimise the output production of a Philip Morris factory

Gunila Tran

2006

Double-dividend analysis with SCREEN : an empirical study for Switzerland

Pierre-André Haldi

This paper presents an empirical study that quantifies the effects of an ecological fiscal reform as recently rejected by the Swiss population. The measure aims to encourage employment and, at the same time, to dissuade from an excessive energy use and thereby decrease energy-induced external costs (CO2, etc.). The analysis is based on the model SCREEN, a general equilibrium model using the complementarity format for the hybrid description of economy-wide production possibilities where the electricity sector is represented by a bottom-up activity analysis and the other production sectors are characterised by top-down production functions. A dynamic formulation of the activity analysis of technologies allows for the reproduction of endogenous structural change (see Frei, C.W., Haldi, P.-A., Sarlos, G., 2003. Dynamic formulation of a top-down and bottom-up merging energy policy model. Energy Policy 31 (10), 1017–1031.). The labour market is formulated according to the microeconomically founded efficiency wages and calibrated for Switzerland. The study includes the development of a consistent set of top-down, bottom-up and labour data for Switzerland. The collection of bottom-up data on the electricity sector, just before liberalisation, was not easy. The electricity sector characterising data was prepared, based on original statistics about 140 Swiss electricity companies.

2005

Project costs and industrial benefits: Analyzing the technological function of the Sydney Opera House thirty years after its completion

Paolo Tombesi

In spite of its revolutionary approach to design and construction, the industrial legacy of the Sydney Opera House has never been the subject of systematic analysis. Whilst celebrating the genius of his conceiver Jørn Utzon, the literature remains aloof about the building’s contribution to the management of construction innovation, the consequent definition of sectoral policies, and the role that public buildings have in their implementation. This paper documents the methodological underpinnings of a recently funded research project, which attempts to fill such a documentary and theoretical gap by seeking answers to questions concerned with the technical, social, political and economic dimensions of the project’s performance. The argument of the paper is that most of these answers can be produced by setting up a framework of historical data connecting the various technologies used for the project to a series of building industry cost proxies, and by analysing their dynamics overtime. The theory behind this work is that the value of design is seldom appreciated fully because it is difficult to measure it within the conventional project-based appraisal framework. The research makes an attempt to reach a better balance between project costs and future benefits by extending the scope of the analysis to the industry at large.

International Council for Building Research and Innovation in Building and Construction (CIB)2005