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Published in:
2011 | OriginalPaper | Chapter
2. The Production Function
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Abstract
Economic theory is, to a large extent, about money—about costs, prices, markets, return on investment, profit and similar economic concepts. This is also the case for the theory of production economics. However, the theory of production economics is special in that the limits of economic behaviour are defined by the technical production possibilities. Production technology is the decisive factor regarding the quantity produced and how it may be produced. Therefore, a very important part of the theory of production economics consists of describing the production technology which defines the framework for the economic behaviour.