Question

How can manager use an production function to decide whether to add an input to increase production

Answer 1

The production function allows the manager to calculate the impact of changes in inputs, its efficiency and yields in the output.

Step-by-step explanation:

The production function, also called Cobb-Douglas Production Function shows the output as the result of the combination or relationship of the factors of production, being the most common capital (K) and labor (L). Its basic form is Q (L,K) = A * L^β * K^α, where

Q = quantity produced (output)

A = Total Factor Productivity (TFP)

L = Amount of labor spent on production

K = Amount of physical capital input

α and β = output elasticities of capital and labor, respectively

Answer 2

Production function could be utilized to find out marginal product and determine allocative efficiency.
With this, a manager could predict the number of products that desired by the consumers And configure the production amount in order to fulfill what the consumers desire