Measurement Of Efficiency In Production

Measurement of Efficiency in Production The theory production has great relevance for the theory firm. The theory of firm is concerned with what level of output it will produce so as to maximize its profits. In order to fix this profit maximizing output, besides the demand conditions, the firm will be guided by the marginal and average costs of production. In addition to the prices of the factors of production, the changes in marginal and average costs of production as a result of increase in output are determined by the physical relationship between inputs and outputs. The relationship between inputs and outputs of a firm has been called the production function. In the present study, an attempt has been made to measure different types of efficiencies in industrial sector of different states and union territories in India by using Data Envelopment Analysis Approach (DEA) and then a comparison is made in industrial sector basing on the different types of efficiency that are obtained.