Production Functions and Economic Theory Quiz

The 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.

Shephard's distance functions or directional distance functions are generalizations of the simple production function in economics.

Aggregate production functions are estimated to create a framework in which to distinguish how much of economic growth to attribute to changes in factor allocation (e.g. the accumulation of physical capital) and how much to attribute to advancing technology.

<p>The production function is used to define marginal product and to distinguish allocative efficiency, which is a key focus of economics.</p> Signup and view all the answers

<p>Economic output is not considered a mathematical function of input in general because any given set of inputs can be used to produce a range of outputs.</p> Signup and view all the answers