EEFA - RETURN TO FACTOR - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY - DR,K,BARANIDHARAN

EEFA - RETURN TO FACTOR - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY - DR,K,BARANIDHARAN

1. Dr.K.Baranidharan Present by…

2. Engineering Economics & Financial Accounting ment E e & f a 2 1 January 2008

3. Return to factors Returns to factors are also called factor productivity . Productivity is the ratio of output to the input. Factors productivity refers to the short-run-relationship of input and output 3

4. The change of productivity can be measured in terms of A)TOTAL PRODUCTIVITY: the total output generated at varied levels of input of a particular factor (while other factor remain constent ) is called the total physical product. B)AVERAGE PRODUCTIVITY : the total physical product divided by the number of that particular factor used ‘yields average productivity. C)MARGINAL PRODUCTIVITY : the marginal physical product is the additional output generated by adding an additional unit of the factor under study, keeping the other factors constant 4

5. The “returns to factors” is also governed by the laws of returns to scale . The total physical product increase with an increase in inputs. However, the rate of increase is varied, not constant. To began with, the total physical product increase at an increasing rate because of the Law of Increasing Returns to scale, and later decline of the Law of Decreasing Return to Scale 5

6. Dr.K.Baranidharan THANK YOU

7. THANK YOU!! 7