Abstract
In this paper, Leontief linear production functions with one product, and one activity are used to derive the production function of Abyek Cement Factory. The mathematical closed form of production function and also, profit, cost, and demand functions for production factors are obtained for the cited factory.
 We tried to calculate Operational Production Function of Abyek Cement Factory. It was realized that Leontief linear production function is applicable, and its mathematical form can properly express the economic structure of production in a cement factory.
 The efficient production function for this factory is also derived in this research. This function exhibits the costs incurred due to the inefficient production of the factory during different years. According to the findings, it was concluded that if the Abyek Cement Factory produces efficiently through employing optimal amounts of factors of production, it can reduce costs by 21 to 52 percent without any change in production level. Calculations were done for both short-term and long-term periods.
 JEL: D22, L11, L61
Highlights
The “Firm Theory” is grounded on the analytical fundamentals of microeconomics.4 A firm is defined as a technical unit that produces goods using production factors
In a cement factory, accumulated capital of the installments is considered as a constant production factor during a short period; gypsum, limestone, iron ore, and other similar production factors are defined as variable production factors that are in direct relationship with the production of clinker and cement
In order to define a production function for a specific firm, the existing specifications of the production process should be studied, and subsequently, they must be expressed in mathematical forms of specific production functions
Summary
The “Firm Theory” is grounded on the analytical fundamentals of microeconomics. A firm is defined as a technical unit that produces goods using production factors. Whether the firm produces or not, the constant production factor in the specified period is not altered. This specified period that is expressed as a short time period here is the basis for defining the constant production factor. This means that if we consider this period as a very long period, the constant production factor can be considered as a variable factor because the firm will be able to alter the application of this factor in the production process. As this production function will be used repeatedly it will be explained more in depth
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
