Production Flashcards
Production
The process of combining the factors of production to make goods and services
Inputs of production
Factors example land, labor, capital intrapreneurship
Outputs of production
 Goods services
Topsoil and all the natural resources
Land
Labor
refers to people with their skills and abilities
Capital
refers to tools, factories, machines, equipment
Entrepreneurship
the ability to discover profitable opportunities and efficiency in pursuing such opportunities
Land is two
Rent
Capital is two
 Interest
LIBOR is to labor
Wage
Entrepreneurship is to
Profit
Cost
How much it takes to make
Rice
How much are willing to pay for it?
Value
How much it’s worth
Fixed cost
Costs that do not change with the level of production
Example of fixed cost
Rent, interest, deprecation, expense, indirect labor 
Variable cost
Costs that change with the level of production 
Example of variable cost
Raw materials direct LIBOR utility 
Total cost
Some of fixed and variable
Overhead costs
are required to run the business and cannot be avoided
operating expenses are
needed to perform services and create products
Overhead cost example
Rent, utilities insurance
Operating cost ex
Salaries, deprecation delivery charges
