• Theory of Production
    factors or resources (inputs) used. The inputs used for producing these goods and services are called factors of production. • Variable factor of Production: A variable factor of production is one whose input level can be varied in the short run. Raw material inputs are a variable factor and unskilled...
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  • Microeconomics - Costs
    from the products and services sold to the market. (Total revenue = unit price x total no. of units) b. Total cost The total amount of the firm’s input which includes the explicit costs and implicit costs in order to produce a good or a service (output). c. Profit It is the difference between the...
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  • Theory of Production
    physical inputs into production and the number of units of output produced is known in economics as the ‘production function’. It describes the technological relation: q f (x 1 , x 2 , x 3 , x 4 ,...., x n ) q = quantity of output of good f(*) summarises the rate at which conversion of inputs into...
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  • Economics in a Business Environment
    problem: managing fixed and variable costs Fixed costs: Supermarket: whether 1 person shops there or 1000 people shop there, the cost of developing & maintaining the store is fixed Developing Apple iPhone is fixed – development costs do not increase if more iPhones are sold. Variable costs: Supermarket...
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  • Short- Run
    least one factor of production is in fixed supply. A business has chosen its scale of production and must stick with this in the short run. We assume that the quantity of plant and machinery is fixed and that production can be altered by changing variable inputs such as labor, raw materials and energy...
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  • Aaaa
    relationship is due largely to the law of diminishing physical returns. -To achieve an increase in the production we add more skilled workers to a fixed number of machines, each new worker produces an additional amount of tips that is smaller each time. Distinction between the two definitions of the...
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  • Mujtaba
    production can be broadly divided into two, i.e. 1) Fixed Factors: These are the factors or things that cannot be changed quickly and easily in the process of production. Examples: Factory Building, Heavy Machinery, Skilled Workers. 2) Variable Factors: These are the things or resources that can...
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  • Microeconomics Questions week 3
    between the quantity of inputs a firm uses and the quantity of outputs it produces." (p. G-7) 42) What is Marginal Product of an input? Marginal product of an input is the output produced with one more unit of input. 43) What is Marginal Revenue Product of an input? Marginal revenue is "the...
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  • economics
    will explain the relationship of variable input and fixed input in the production process. This law is known as the Law of Production Process or Law of Diminishing Marginal Productivity. The law state that when successive units of variable input used with a fixed input beyond a certain point, the additional...
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  • Microeconomic
    a process where firm can transform the inputs into outputs. Firms can use various level of production with the combination of factors of production to produce goods and services. A production function is a statement of the functional relationship between inputs and outputs. The Short Run Production...
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  • Theory of Production
    In microeconomics, Production is quite simply the conversion of inputs into outputs. It is an economic process that uses resources to create a commodity that is suitable for exchange. This can include manufacturing, storing, shipping, and packaging. Some economists define production broadly as all economic...
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  • Market
    the good. Marginal revenue o the change in total revenue from the sale of each additional unit of output. Total revenue is P x Q, where P is fixed for a competitive firm. Therefore, when Q raises by one unit, total revenue rises by P dollars. For competitive firms, marginal revenue equals the price...
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  • Economic Costs
    first determines which production processes are technologically efficient so that it can produce the desired level of output with the least amount of inputs. As we saw in Chapter 6, the firm uses engineering and other information to determine its production function, which summarizes the many technologically...
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  • Law of Diminishing Productivity
    of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output. In the...
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  • Retail Management
    The producer or firm has to make payments for this factor services. From the point of view of the factor inputs it is called ‘factor income’ while for the firm it is ‘factor payment’, or cost of inputs. Generally, the term cost of production refers to the ‘money expenses’ incurred in the production of...
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  • Midterm Review
    already in the market respond to a change in equilibrium price by adjusting the amount of certain resources, which ecomnomists call variable inputs. Examples of inputs are labor hours and raw materials. Can be seen as a movement along a particular supply curve. * Period of time in which buyers already...
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  • Production Function
    resources or inputs. These inputs are called factors of production named as land,  labor, capital and organization. A rational producer is always interested that he should get the maximum output from the set of resources or inputs available to him. He would like to combine these inputs in a technical...
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  • Economics
    Production is simply the conversion of inputs into outputs. It is an economic process that uses resources to create a commodity that is suitable for exchange. This can include manufacturing, storing, shipping, and packaging. Some economists define production broadly as all economic activity other than...
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  • Retert
    use the principles presented in this chapter to develop accurate information about costs. Economies of scale arise from either significant fixed costs or variable costs that diminish with the scale of production. An industry where businesses exhibit scale economies will tend to be concentrated. Economies...
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  • Supply
    Short run: time horizon within which seller cannot adjust at  least one input least one input  Long run:  time horizon long enough for seller to adjust all inputs  p All inputs are variable in long run, but some inputs are fixed in  All inputs are variable in long run but some inputs are fixed in short run. Hence, short‐run/long‐run costs (or supply curve) are ...
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