Theory of production and cost, Microeconomics

• Production Function . The factors of production have to be combined in a particular manner to produce a certain product. Think of baking a cake which involves mixing fixed proportions of the ingredients, following a definite procedure. Indeed, baking a cake is production in economic terms. The set of all feasible combinations of factors of production and output levels produced by them is known as the production set.

• Short Run Production Process,

• Law of Diminishing Marginal Product: This law states that given the fixed factor of production, as the amount of the variable factor is increased, a certain stage is reached beyond which the MP declines. That is, the output produced increases but at a diminishing rate. On further increasing the variable factor, the output produced starts declining.

• Long Run Production Process: The first graph depicts the long run scenario when it is possible to vary all the inputs. The red lines represent the output produced and are called isoquants. Isoquants are the locus if the feasible combinations of inputs that produce a given amount of output.

Posted Date: 3/13/2013 12:42:47 AM | Location : United States

Related Discussions:- Theory of production and cost, Assignment Help, Ask Question on Theory of production and cost, Get Answer, Expert's Help, Theory of production and cost Discussions

Write discussion on Theory of production and cost
Your posts are moderated
Related Questions
An important aspect of municipal finance involves capital budgeting and resource allocation.  In some cases, resource allocations involve expenditures that are not directly revenue

Compensated Demand Curve: Compensated demand function for a commodity (say x1) of an individual consumer represents demand quantity for that good (which is purchased by the co

explain about rent theory

explain how the keynesian cross shows that the economy is susceptible to self-fulfilling prophesies, either positive or negative

Another school of thought developed what is called loanable funds theory of interest. Among the principle economists who contributed to the development of loanable funds theory men

concept of supply and the factors that affect the supply

MRP Technique- Sectoral Distribution of Targeted Increase in GDP There are two ways of increasing the GDP: (i) Project and accomplish the growth in various sectors through

how to differentiate the exeptional demand and exceptional supply?

Why does a monopoly have no supply curve?  A supply curve is a curve that shows the quantity supplied at dissimilar prices, as a monopoly sets the price and the quantity togeth

Token Privatisation: This implies the sale of 5 per cent or 10 per cent shares of a profit-making public sector enterprise in the market with the objective of obtaining revenue t