![]() In a fixed-proportions production function, both capital and labor must be increased in the same proportion at the same time to increase productivity. Examples of Fixed-Proportions Production Functions A fixed-proportions production function is a function in which the ratio of capital (K) to labor (L) does not fluctuate when productivity levels change. ![]() Production capital includes the equipment, facilities and infrastructure the business uses to create the final product, while production labor quantifies the number of man-hours needed to complete the process from start to finish. 35.Ī production function represents the mathematical relationship between a business's production inputs and its level of output. Macro-economic Theory: A Mathematical Treatment. ![]() It was named after Wassily Leontief and represents a limiting case of the constant elasticity of substitution production function.įor the simple case of a good that is produced with two inputs, the function is of the form q = Min ( z 1 a, z 2 b ). In economics, the Leontief production function or fixed proportions production function is a production function that implies the factors of production will be used in fixed (technologically pre-determined) proportions, as there is no substitutability between factors. Two input Leontief Production Function with isoquants ![]()
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