Production set

If it needs the same amount of labour to run at half capacity then the production vector (–1,–5,4,0) would also be operationally possible.

The mill's owner will normally choose y from the production set to maximise this quantity.

If a production set is separable then we may define a "production value function" fp(x) in terms of a price vector p. If x is a monetary quantity, then fp(x) is the maximum monetary value of output obtainable in Y from inputs whose cost is x.

Constant returns to scale mean that if y is in the production set, then so too is λy for any positive λ.

There is no entirely satisfactory way to define increasing or decreasing returns to scale for general production sets.