2. PRODUCTION FUNCTION
Production is the process of conversion of input into
more variable output analysis of demand is may be
used in planning to production process
Q=f(L d, L, C, M ,T ,t)
INPUTS
1.MONEY
OUTPUTS
PRODUCTIO 1.TANGIBLE
2.MAN N PROCESS OR
3.MATERIAL
INTANGIBLE
GOODS
4.MACHINER
AND SERVICES
Y
3. TYPES OF PRODUCTION FUNCTION
Depending on the time element
Short-run production function
a) Marginal product(MP)
b) Average product(AP)
c) Total product(TP)
Long-run production function
4. ISOQUANT
isoquant is a curve representing the various
combinations of two on puts the produce the
same amount of output
It is also known as iso-product curve,equal-
product curve
5. TYPES OF ISOQUANTS
1. Linear Isoquant
2. Input-Output Isoquant
3. Kinked Isoquant
4. Smooth Convex Isoquant
6. ISOCOSTS
An isocost line represents a combination of
inputs which all the cost the same amount
The isocost line is combined with the
Isoquant line to determine the optimal
production point
7. COBB-DOUGLAS PRODUCTION
FUNCTION
b 1-b
Q =a[L C
]
Where Q=quantity of output
L=quantity of labour
C=quantity of capital
a,b are positive constants
8. RETURN TO SCALE AND
RETURNS TO FACTORS
Law of returns to scale
a) Law of Increasing Returns to Scale
b) Law of Constant Returns to Scale
c) Law of Decreasing Returns to Scale
Returns to factor
a) Total Productivity
b) Average Productivity
c) Marginal Productivity
9. 1. Internal Economies
a) Managerial Economies
b) Commercial Economies
c) Financial Economies
d) Technical Economies
e) Marketing Economies
f) Risk-bearing Economies
g) Indivisibilities And Automated Machinery
h) Economies of larger Dimension
i) Economies Of Research And Development
10. ECONOMIES OF SCOPE
Definition : It is often used some what
differently than the concept of economies of
scale . It refers to the reduction in unit cost
realized then the firm produces two or more
products jointly rather than separately.
11. INNOVATIONS AND GLOBAL
COMPETITIVENESS
a) Product Innovation
b) Process Innovation
c) Product Cycle Model
d) Just-In-Time Production system
e) Competitive Benchmarking
12. External economies
a) Economies of Concentration
b) Economies of Research And Development
c) Economies of Welfare
