production theory in economics

Production theory in economics examines how businesses combine resources—like labor, capital, and raw materials—to create goods or services efficiently. It explores how input quantities affect output levels, aiming to maximize output while minimizing costs. The theory analyzes concepts like productivity, returns to scale, and the most efficient ways to produce, helping firms make better decisions to optimize operations and profit. Essentially, it provides a framework to understand and improve the process of turning resources into valuable products.