Today, in this article we will see What is the importance of the production function of business management economics? A company is defined as various productive factors, which are intended to produce goods or services, this being the most basic of its economic system. On the other hand, the economics of a company is an extension of the economy, which studies economic events in companies.
The economics of the company is understood in a positive way, showing what steps a company is going through and how it works. Or from a more normative point of view, where the economy of the company is a reference for the decisions of the company, being very useful to meet the goals of the company.
Today we will talk about What is the importance of the production function of the managerial business economy? with explanation and mentioning some of its advantages.
Importance of the production function in the economy
On the other hand, the functions are math science equations, which describe a relationship between one or more independent variables, and a variable that is dependent. When we speak of production functions, we refer to those which have changes in the products produced, taking into account the resources used in their production.
In this first function, its dependent variable has been the units of products that have been produced. We can say that this is the output, while the variables that are independent are the inputs.
This function It will depend on the specific product that it is, and the technologies that are possessed, these production functions can and usually do use different independent variables.
Resources used for production
The inputs, are the resources used during the production of a productDepending on the product to be produced, the inputs that are going to be required to produce it vary, or they can be substituted by other inputs. With the production functions, you can see which pattern of used products is more efficient for the production of a product.
Quantity produced of the product or output
As the title of this point anticipates, when we speak of “exit” we refer to the quantity of a product produced. It is decisive in the production function, since you must have the ability to predict how many units of a product have been produced and put it on sale.
This is a characteristic of successful companies, as it helps to make production prices profitable for them. Because these amounts are calculated, enabling better analysis of the business plan of the company, based on all the results that have been thrown in different areas, and among these results are those of the production function.
Production in managerial economics
Finally, the product functions are used by a company in its economy, determining the most efficient combination of inputs to produce a certain amount of products. These do not have to be real, they serve as a stage where you can analyze future decisionsHow to efficiently use inputs by the business, collaborating with the management of the company.
Production function benefits of the economy
This function brings a variety of benefits to the company, since, with this function, the purchasing and sales department, and others, can make use of the data thrown by this function, giving better decision making. The company is better planned with respect to its production expenses, also seeing how many products it is capable of producing to put on sale, and improve the economy of the company.
We hope this article has been useful to you, where we saw the importance of the production function in managerial and business economics, observing the benefits that they can bring to the company, with the information it has about itself, the inputs it requires and the amount of products it produces for sale.