State two types of production function.
Answers
There are two distinct types of production function that show possible range of substitution inputs in the production process. ... In this type of production function, the two factors of production, say labour and capital, should be used in a fixed proportion.
(A) Increasing Production Function:
Though, in case of such functions, the mathematicians do not generally discuss the way the production increases when the inputs increase, an economist has to give considerable attention to this aspect.
From his point of view, it is important to know whether the rate of increase in production in response to successive equi-proportional changes in all inputs taken together (expressed in terms of returns to scale) or to successive changes in the amount of single input taken in isolation (expressed in terms of returns to a variable factor), is itself increasing, is constant or is decreasing. In other words, he is deeply interested in knowing whether the marginal returns to scale or the marginal returns to a variable factor are increasing, constant or decreasing.
(ii) Increasing production function with increasing marginal returns on the variable input:
In this case, every successive dose of input brings about an increasing addition to the total output i.e., the output increasing rate when more and more units of an input are used. This type of relationship generally emerges when the fixed factors being used in production are having an excess capacity and use of additional units of the variable input results in a better utilisation of these fixed factors. The following table shows this type of production function.
