Here, output is a simple function of inputs unlike in the Leontief Production Function, capital can be substituted for labor perfectly. The most basic is the Linear Production Function. The Leontief Production Function is used in IMPLAN to dictate the ratio of inputs needed by each Industry in order to produce a unit of Output (in terms of dollar value). The differences among them lie in the relationship between the variables: output, capital, and labor. There are three main types of production functions: linear, Cobb-Douglas and Leontief. The ability to substitute factors of production is demonstrated in the shape of the isoquants (Hess, 2002). Isoquants are the lines shown in graphical representations of production functions that show the required financial capital (K) and labor (L) required to produce the quantity of output (Q). In general, functions talk about relationships between variables.The basic formula for production functions is: This article outlines the three most common production functions, with an emphasis on our personal favorite, the Leontief Production Function. They represent the technically-efficient combination of inputs required for producing a certain level of output (Hess, 2002). Production functions detail the relationship between inputs and outputs.
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