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pohnpei397 eNotes educator| Certified Educator

In economics, the term "production function" refers to the relationship between the maximum output a firm can produce and the quantities of the various inputs that it uses to produce that output.

When you have your production function (it's a mathematical equation, essentially) you can figure out how much output will change if you vary the amount of one input (to do this, you hold all other inputs constant and change only the input whose impact you want to study).

Once you have your production function, it can give you other important information such as marginal product of your inputs, and marginal cost of your products.