Posted February 28, 2013 by Hayat Canada
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Production function in economics explains the functional relationship between inputs and output. Whatever mathematical form the production function takes, i.e. Cobb Douglas, Constant Elasticity of Substitution etc, the basic ingredients of any production function are inputs and how they relate with output. The most commonly taken inputs are Labor (N) and Capital (K). Total Factor Productivity (TFP) is the summary measure of the impacts of other inputs, social and legal infrastructure and the technological change. Below, we summarize the impact of Islamic Economics principles on the production function in an economy.