PRODUCTION AND COST Flashcards
The creation of any good or service for the purpose of selling.
The creation of outputs by business firms, by government agencies, and by non-profit institutions like schools and hospitals.
PRODUCTION
Production is an activity where inputs are transformed into outputs. To be able to do it, the following are required;
> Assembling the necessary inputs: and
transforming the input through a recipe and process into output of goods and services.
The various inputs consists of;
CAPITAL
LABOR
LAND
ENTREPERNEURIAL OR MANEGERIAL TALENT
CATEGORIES OF PRODUCTION ACTIVITIES
> UNIQUE-PRODUCT PRODUCTION
RIGID MASS PRODUCTION
FLEXIBLE MASS PRODUCTION
PROCESS OR FLOW PRODUCTION
A schedule showing the maximun amount of outputs that can be produced from any specified set of inputs given the existing technology.
PRODUCTION FUNCTION
THE CLASSES OF INPUTS
FIXED INPUT
VARIABLE INPUT
are classified as either FIXED OR VARIABLE
INPUTS
one whose quantity cannot be readily changed when market conditions indicate that a change in output is desirable.
Fixed Input
one whose quantity can be readily changed when a change in output is desired
Variable Input
refers to that time frame in which the input of one or more productive agents id fixed.
SHORT RUN
period of time in which all inputs are variable.
LONG RUN
Total amount output produced in physical units as bags of fertilizer, bottles of vinegar, or pairs of shoes.
TOTAL OUTPUT
refers to the total output divided by the quantity of the variable inputs under consideration.
AVERAGE PRODUCTS
the additional output attributed to increase in the quantity of the variable inputs under considerations.
MARGINAL PRODUCT
refers to the sum of all the expenditures in producing goods and services.
TOTAL COST
