Production is an important economic activity which satisfies the wants and needs of the people.
Factors
of production
Production is an important economic
activity which satisfies the wants and needs of the people. Production function
brings out the relationship between inputs used and the resulting output. A
firm is an entity that combines and processes resources in order to produce
output that will satisfy the consumer’s needs. The firm has to decide as to how
much to produce and how much input factors (labour and capital) to employ to
produce efficiently. This chapter helps to understand the set of conditions for
efficient production of an organization.
Factors
of production include resource inputs used to
produce goods and services.
Economist categorise input factors into four major categories such as land,
labour, capital and organization.
Land: Land is heterogeneous in nature. The supply of land is fixed and it is a permanent factor of production
but it is productive only with the application of capital and labour.
Labour: The supply of labour is inelastic in nature but it differs in productivity and efficiency and it can
be improved.
Capital: is a man made factor and is
mobile but the supply is elastic.
Organization:
the organization plans, , supervises, organizes and
controls the business activity and
also takes risks.
Tags : Managerial Economics - Production Analysis
Last 30 days 782 views