Cost of production
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Cost of production

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for CHMSC LAB SCHOOL-YEAR IV STUDENTS....

for CHMSC LAB SCHOOL-YEAR IV STUDENTS.
by:Mrs. Anapi

More in: Business , Technology
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  • 1.  
  • 2. COST OF PRODUCTION
    • Price of the inputs used in the production process
        • Labor
        • Capital
        • Land
        • Enterprise
  • 3.
    • technical relationship between an inputs and outputs
        • Shows possible output for a given inputs
        • e.g. A kilo of flour could yield 45 pieces muffins
    • Governed by the economic principle “ Law of diminishing marginal productivity”
  • 4. “ Law of diminishing marginal productivity”
    • Increases in variable input will result in increases in total production at a decreasing rate
      • additional contribution of the variable input to total output decreases, as the variable input is increased
      • (2 laborers in a Internet Café are enough, to add 1 more, would decrease the output)
  • 5.
    • 2 Categories of Inputs
    • Intermediate Inputs – raw materials
    • (are transformed and process to new products)
    • Factor Inputs – utilized in transforming raw materials into processed products
    • F.I. facilitates in the transformation of I.I. into new products
  • 6.
    • the service rendered in the process of production
    • - effort exerted to secure economic benefits
        • Use of physical or mental abilities
        • Wage is the payment for labor
  • 7.
    • Productivity of workers - payment commensurate to the productivity
    • Opportunity cost of working - how individual values alternative activities to working
    • Equilibrium wage - the payment reflective of the productivity of the workers as well as the amount he/she is willing to accept to entice him/het to work
  • 8.
    • Material things resulting from man’s effort
    • Produces goods used for further production
    • Medium by which land and labor (the real productive powers), exert their instrumentality
        • Buildings, equipment, materials used in production
  • 9.
    • Real Capital - factories or pieces of machinery used to produced goods
    • Financial Capital - financial assets like shares of stocks, bonds or basic deposit
  • 10.
    • Fixed Capital - immovable durable goods which are used repeatedly
      • Building; heavy machineries
    • Circulating Capital - those which are used once, like raw materials
  • 11.
    • Natural resources
    • RENT - payment for the use of land
          • Determined by the demand for land
  • 12.
    • Coordinates with other 3 factors to function smoothly, efficiently and fruitfully.
    • Responsible for initiation, organization and operation of production and for assuming risk to failure.
    • Factor = Enterprise
    • Individual who assumes responsibility = entrepreneur
  • 13.