Mastering Production Functions

The purpose of a production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors.

Aggregate production functions are estimated to create a framework in macroeconomics.

The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency.

<p>The production function abstracts away from the technological problems of achieving technical efficiency.</p> Signup and view all the answers

<p>Shephard's distance functions are used for modelling the case of many outputs and many inputs, and are generalizations of the simple production function in economics.</p> Signup and view all the answers

<p>To address allocative efficiency</p> Signup and view all the answers

<p>Addressing allocative efficiency</p> Signup and view all the answers

<p>Generalizations of the simple production function</p> Signup and view all the answers

<p>Framework in macroeconomics</p> Signup and view all the answers

<p>Shephard's distance functions</p> Signup and view all the answers