Types of Production Function
Broadly speaking, production function can be classified under two heads:
1.Fixed proportions production function, and
2.Variable proportions production function
Under the former the productive factors are combined together in certain fixed proportions. For example, the firm may employ 100 workers to produce an output of1000 units.This proportion is faced and cannot be varied by substitut- ing capital for labour. Under the latter (Variable Proportions a Production Function), the proportion in which the productive factors are employed can be varied to produce the same level of output, in other words, the same output can be produced by a number of alternative combination of productive factors.
There is still another type of production function known as linear Homogeneous Production Function (also known as Homogeneous Production Function of the First Degree). Economists in economic analysis frequently use this production function. According to the production function, if the productive factors are increased in a certain pro- portion, the output increases exactly in the same proportions. For example, if the productive factors are increased by 50 per cent, the also increases by 50 per cent. It is a case of constant returns to scale.
Factors Affecting Production Function
The production function iş influenced by a variety of factors, some of which are given below:
1. Size of the Firm -The size of the firm greatly affects the production function. Larger the size of the firm, larger shall be the economies of production and lower shall be the cost per unit.
2. Nature of Organization of the Firm -A well organized and an efficient firm is bound to have a better input- output ratio than an inefficient and ill-organized firm.
3. Relative Price of the Factors of Production -This Tactor has close bearing on the input-output ratio. Cheaper prices of the factors of production are bound to have their repercussions on the production function.
4. Proportion of the Factors of Production-
The proportion in which the various factors of production are com- bined together also affects the production function. If the proportion of cheaper factors is larger than that of the more expensive factors the input-output ratio is bounded to be high.
5. State of Technical Know-how- The state of technical know-how greatly affects the production function If advanced technical know how is being applied business, the input-output ratio is bound to be high. The more efficient the technique employed, the larger shall be the output.
The concept of production function plays a vital rote in the theory of production. It helps us grasp the law of various proportions, according to which one factor is kept constant., white the remaining product factors are increased to increase the output. It also helps us in the study of equal product curves with the aid of which we arrive at the optimum factor combination for producing a given output Finally, the concept of production function helps us to draw the cost curves of a given output.