ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An aggregate production function (PF) relates total output to total employment, assuming all other factors of production and technology are fixed. It shows that increases in employment lead to increases in output but at a decreasing rate.

Detailed explanation-2: -The aggregate production function describes how total real gross domestic product (real GDP) in an economy depends on available inputs. Aggregate output (real GDP) depends on the following: Physical capital-machines, production facilities, and so forth that are used in production.

Detailed explanation-3: -The aggregate production function combines an economy’s physical capital stock, labor hours, human capital, knowledge, natural resources, and social infrastructure to produce output (real GDP). The idea of the production function is simple: if we put more in, we get more out.

Detailed explanation-4: -An aggregate production function specifies how certain inputs in the economy, like human capital, physical capital, and technology, lead to the output measured as GDP per capita.