What the mean of production

What does the term Production mean? This is in fa some activity of making. In economics, production is th creation of utility in any form. In economics, by productior we mean the process by which man utilises or converts th natural resources, working upon them so as to make ther satisfy, human wants. Satisfaction of human wants can b provided only by the utility of a good or service. This crea tion of utility may be by way of creating goods in physica terms (called commodities) or non-physical terms (called services). Production of wheat, cloth, medicines or some such things are taken as production of commodities whereas the services provided by doctors, engineers, professors, transporters etc. are known as production of services but both are production in economic sense. Therefore, economic production covers the complex process of human activities devoted to the creation, with limited resources, of goods and services in any form, capable of satisfying human wants having definite economic value.

We know that the production creates utility and this utility can take any form. These forms of utility can be as under:

1.Form Utility
2.Place Utility
3.Time Utility

In brief, creation of utility is a necessary condition of production activity. Only those goods and services will be classified as production which possess following characteristics:

1.These are created by engaging the effort of labour and capital.

2.These are capable of satisfying human wants directly or indirectly.

3.These are relatively scarce, and therefore, have eco- nomic value.

4.These have definite monetary cost

Meaning of Function

Function explains the relationship between two variables. When a variable Y’ is related with another variableX’ in such a manner that whenever there is a change in X,Y’ will also change, it is said that the variable Y’ is the dependent of variable X*. In technical language, it is said that ‘Y’ is a function of X’. It can be presented in the form of a formula also as under :

Y =In this case, the value of Y’ can be calculated easily for a given value of ‘X.

Definitions of Production Function

Samuelson and  define production function as The production function is the technical relation the maXimum amount of output that can be produced by each and every set of specified input. It is defined for a given state of technical knowledge”.

C. E. Ferguson de fines production function as “a schedule showing the maximum amount of output that can he produced from any specified set of inputs, given the existing technology or state of art”.

On the basis of analytical study of above definitions, it can be concluded that Production Function is the relation- ship between physical units of the factors of production (inputs) and physical units of goods and services (outputs) produced in a firm during a certain period.

Assumptions of Production Function

The production function is based on the following

1.It is related to a specified period of time,
Fig,

2.It is assumed that the state, of technical knowiedge does not change during the period of time,

3.It is assumed that the firm will use the best and the most efficient technique available in production.

4.The factors, of production are divisible into viable units.

These assumptions may all so be considered as the characteristics of production function.