DELOS REYES, SHAIRA MAE V,
MA007 MANAGERIAL ECONOMICS
Assignment in Production and Cost
August 14, 2022
I. Production
production is the process of transforming factors of production into goods and services
the factors like capital, land, labors, machine, technology, and Entrepreneurship
collectively known as input.
Research and Studies on the following topics:
1. Economic well-being
The concept of the economic well-being of a unit (or "economic status" or "well-
offness") refers to its ability to demand goods and services, in relation to its needs.
2. Concept, Forms, Elements of Production
Cost, time and flows are three key concepts which constitute the central elements of
production management.
o Production in Economics is an act of creating value that satisfies the wants of
the individuals.
Elements of production are land, labor, capital, and entrepreneurship.
There are three forms of production namely: primary production (extractive industry),
secondary production (manufacturing and constructive industry) Tertiary production
(commercial and direct services).
3. Concept and Features of Production Function
“A Production function refers to functional relationship between the input and the
output under given technology” with per unit of time (Technological and physical
relations between input and outputs).
Attributes or features of Production Function
o Flow concept
o Physical Concept
o State of Technology and inputs
o Some inputs are complementary in nature
o Some inputs are substitute to another
o Some inputs may be specific
o Factors combination for maximum output
o Long run and short run production function.
4. Law of Production
deals with the concepts of cost and producers equilibrium. It is an important aspect of
economics as it helps a business determine the level of output that leads to maximum
profits. It also defines the various variable and fixed costs of the firm.
5. Law on diminishing marginal return
The output can is produced by keeping one factor as fixed while all other factors are
varied.
6. Law of Diminishing Marginal Returns
The law of diminishing marginal returns states that there comes a point when an
additional factor of production results in a lessening of output or impact.
7. Law of Variable Proportions
The production function where one factor is variable and rest all other factors are kept
constant or fixed
8. Laws of Returns to Scale
Another type of production function, where quantities of every input combination can
be varied to produce the different quantities of output
9. I S O Quant
I S O Quant’s is the combination of two words, Where I S O means Equal and Quant’s
means quantities. I S O Quant’s mean equal quantities (Equal Quantity of output).
10. . ISO Cost
Iso-cost line represents the price of factors along with the amount of money an
organization is willing to spend on factors. In other words, it shows different
combinations of factors that can be purchased at a certain amount of money.
11. Economies of the Scale
Anything which serves to minimize average cost production in the long run as the scale
of output increases is referred as Economies of scale; it is measured in monitory terms.
12. Diseconomies of Scale
The Economies of Scale will not continue for a long time, after certain level, too much
expansion will create Diseconomies in production instead of Economies
