THE PRODUCTION THEORY

Production refers to the use of economic

resources to create goods services that will
be used to satisfy human wants.
Focus on the behavior of the producer in
an attempt to maximize output. The theory
of production is an analysis of the input-
output relationship.
THE PRODUCTION THEORY

The term input refers to the resources

used to produce goods and services.
Output refers to the product created
as a result of the combination of input
in the production process.
The production function contains
the functional relationship
between output and the basic
factors of land, labor, and capital.
These basics factors complement
each other as they are used in
the production of goods and
services.