production function in one variable.pptx

production function in one variable

1. Central University of Kashmir Department of Management Studies MBA- 1 st Semester Subject: Managerial Economics Name: Basit Bashir Enrollment No: 2501CUKmr05 Semester: 1 st Submitted to: Mr. Rahul Rangotra

2. Production Function with One Variable Topic:

3. Production The process in which various inputs, Such as Land, Labour and Capital are used to produce the outputs in the form of product or services. Process by which Inputs are transformed into Output.

4. Four Factors (most important for production) Land Labour Capital Entrepreneur Factors of Production

5. Production Function Technical Relation which connect Input and Output. Output is a function of Input(Land, Labour , Capital and Entrepreneur) Mathematically: Q=f(LA, L, K, E) Where, LA is Land, L is Labour , K is Capital, E is entrepreneur

6. Labour Productivity can increase if there are Improvement in Technology by using more Capital

7. Law of Variable Proportion Some Factors are Fixed And Some are Variable, Eg : Capital (Fixed) Labour (Variable) This Law States that by adding units of Variable Input Total Output Increases Increase in Total Production becomes Smaller and Smaller after some point

8. Important Terms Total Product: How much we produce (output) from total quantity of all input Average Product: When we divide total product by Input we get Average Product. Marginal Product: Change in Total Output due to change in amount of Input

9. Source: Phantran.net

10. Stage 1 Total Production Increases at Increasing rate. Average product start from origin and then increases till its Max. point. Marginal Product increases, reaches at max. and then start falling

11. Stage 2 Total Production Increases at Decreasing rate till it reaches the max. point. Average product falls Continuously. Marginal Product falls continuously till it is equal to zero.

12. Stage 3 Total Production starts falling. Average product falls Continuously but never touches x-axis. Marginal Product is negative

13. Conclusion At Stage III: Production is in Negative At Stage I: We will not make the best use of fixed factor. At Stage II: we will seek to produce products

14. Than k You