0
• Ms n.Magqabaza
• Student no:201133269
• email:
thandazamagqabaza@gmai
l.com
TABLE OF CONTENT
• PRODUCTION FUNCION
• DEFINITION OF PRODUCTION FUNCTION
• IMPORTANT FACTS ABOUT PRODUCTION FUNCTION
•
•
...
by tanveerabbott on Jan 06 2013

Inputs

Process

Land

Labour
Capital

Product or
service
generated

Output
PRODUCTION FUNCTION
WHAT IS PRODUCTION?

It’s an activity that
transforms input into
output.
• by tanveerabbott on Jan
o6,2013
IMPORTANT FACTS ABOUT PRODUCTION
FUNCTION
• A Production function is expressed with reference to a particular period of ti...
TYPES OF PRODUCTION
FUNCTION
• The fixed proportion production function.
• The variable proportion production
• by tanveer...
FIXED PROPORTION PRODUCTION
FUNCTION
• There is only one way in which the factors may
be combined to produce a given level...
VARIABLE PROPORTIONS
PRODUCTION FUNCTION
• Acc. to it, a given level of output can be
produced by several alternative
comb...
USES OF PRODUCTION
FUNCTION
• How to obtain Maximum output
• Helps the producers to determine whether employing variable i...
THREE STAGES OF PRODUCTION
• Stage 1: average

Stage 2

Total Output

product rising.

• Stage 2: average

Stage 1

produc...
FACTORS AFFECTING
PRODUCTIVITY
Technology

Inputs

•

Labor

•

Capital

•

Machinery

•

Land

•

Raw material

•

Power
...
SCHEDULES AND GRAPHS
SHORT RUN PRODUCTION FUNCTION
BY GEETIKA PRACHISH ON SEP 29, 2013
Short Run

Plant size is
fixed, labor is
variable

SHORT RUN VS. To increase production firms
LONG RUN
Short Run

Firms pr...
ANALYSIS OF PRODUCTION
FUNCTION:
SHORT RUN
• In the short run at least one factor be fixed in supply but all other factors...
ANALYSIS OF
PRODUCTION
FUNCTION:
SHORT RUN

by tanveerabbott on Jan o6 2013

In times of rising
sales (demand)
firms can i...
ANALYSING THE PRODUCTION
FUNCTION: LONG RUN
•

The long run is defined as the period of time taken to vary all factors of ...
ANALYSIS OF
PRODUCTION
FUNCTION:
SHORT RUN

by tanveerabbott on Jan o6 2013

If demand slows
down, the firm can
reduce its...
LAW OF VARIABLE PROPORTIONS
Law of Variable Proportions (Short run Law of Production)
Assumptions:

•
•
•
•

One factor (s...
TOTAL PRODUCT FUNCTION (TP)
• Represents the relationship between the number of workers (L) and the TOTAL number of
units ...
CONCLUSION
• Production function is simply a catalogue of production possibilities.
• It is an engineering concept and sin...
QUESTIONS ???

by tanveerabbott on jan,o6 2013
Thank You
LIST OF REFERANCES
• http://www.slideshare.net/geetsrivastava/production-function-26663899?qid=36099a90-6649-4cc6-97bdafd3...
Upcoming SlideShare
Loading in...5
×

Presentation4

30

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
30
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Example of lathe machine and one worker required for one unit of product.
  • Example of cement plantFirst running at 80% capacity then at 100% with more labor
  • Again Example of cement plantThis time we take 2 cement plants with increase in labor
  • Transcript of "Presentation4"

    1. 1. • Ms n.Magqabaza • Student no:201133269 • email: thandazamagqabaza@gmai l.com
    2. 2. TABLE OF CONTENT • PRODUCTION FUNCION • DEFINITION OF PRODUCTION FUNCTION • IMPORTANT FACTS ABOUT PRODUCTION FUNCTION • • • • • • • TYPES OF PRODUCION FUNCTION USES OF PRODUCTION FUNCTION STAGES OF PRODUCTION FUNCTION FACTORS AFFECTING PRODUCTIVITY SCHEDULES AND GRAPHS CONCLUSION LIST OF REFARANCES
    3. 3. by tanveerabbott on Jan 06 2013 Inputs Process Land Labour Capital Product or service generated Output
    4. 4. PRODUCTION FUNCTION
    5. 5. WHAT IS PRODUCTION? It’s an activity that transforms input into output. • by tanveerabbott on Jan o6,2013
    6. 6. IMPORTANT FACTS ABOUT PRODUCTION FUNCTION • A Production function is expressed with reference to a particular period of time. • It expresses a physical relation because both inputs and outputs are expressed in physical terms. • Prodction function describes a purely technological relation because what can be produced from a given amount of inputs depends upon the state of technology • by Geetika Prachish on Sep 29, 2013
    7. 7. TYPES OF PRODUCTION FUNCTION • The fixed proportion production function. • The variable proportion production • by tanveerabbott on Jan 06,2013 function.
    8. 8. FIXED PROPORTION PRODUCTION FUNCTION • There is only one way in which the factors may be combined to produce a given level of output efficiently. • It requires a fixed combination of inputs to produce a given level of output. • There is no possibility of substitution between the factors of production. • by tanveerabbott on Jan 06,2013
    9. 9. VARIABLE PROPORTIONS PRODUCTION FUNCTION • Acc. to it, a given level of output can be produced by several alternative combinations of factors of production, say capital and labour. • It is assumed that the factors can be combined in infinite number of ways. • The common level of output obtained from alternative combinations of capital and labour is given by an isoquant Q in Fig. • by tanveerabbott on Jan 06,2013
    10. 10. USES OF PRODUCTION FUNCTION • How to obtain Maximum output • Helps the producers to determine whether employing variable inputs /costs are profitable • Highly useful in longrun decisions • Least cost combination of inputs and to produce an output • by tanveerabbott on Jan 06,2013
    11. 11. THREE STAGES OF PRODUCTION • Stage 1: average Stage 2 Total Output product rising. • Stage 2: average Stage 1 product declining (but marginal product positive). • Stage 3: marginal Stage 3 product is negative, or total product is declining. L • by Geetika Prachish on Sep 29, 2013 Figure 7.4 on Page 306
    12. 12. FACTORS AFFECTING PRODUCTIVITY Technology Inputs • Labor • Capital • Machinery • Land • Raw material • Power Time period by tanveerabbott on Jan 06,2013
    13. 13. SCHEDULES AND GRAPHS SHORT RUN PRODUCTION FUNCTION BY GEETIKA PRACHISH ON SEP 29, 2013
    14. 14. Short Run Plant size is fixed, labor is variable SHORT RUN VS. To increase production firms LONG RUN Short Run Firms produce in the short run increase Labor but can’t expand their plant by Geetika Prachish on Sep 29, 2013
    15. 15. ANALYSIS OF PRODUCTION FUNCTION: SHORT RUN • In the short run at least one factor be fixed in supply but all other factors are capable of being changed. • Reflects ways in which firms respond to changes in output (demand). • Can increase or decrease output using more or less of some factors. • Increase in total capacity only possible in the long run. • by tanveerabbott on Jan 06,2013
    16. 16. ANALYSIS OF PRODUCTION FUNCTION: SHORT RUN by tanveerabbott on Jan o6 2013 In times of rising sales (demand) firms can increase labour and capital but only up to a certain level – they will be limited by the amount of space. In this example, land is the fixed factor which cannot be altered in the short run.
    17. 17. ANALYSING THE PRODUCTION FUNCTION: LONG RUN • The long run is defined as the period of time taken to vary all factors of production • By doing this, the firm is able to increase its total capacity – not just short term capacity • Associated with a change in the scale of production • The period of time varies according to the firm and the industry. • by tanveerabbott on Jan 06,2013
    18. 18. ANALYSIS OF PRODUCTION FUNCTION: SHORT RUN by tanveerabbott on Jan o6 2013 If demand slows down, the firm can reduce its variable factors – in this example it reduces its labour and capital but again, land is the factor which stays fixed.
    19. 19. LAW OF VARIABLE PROPORTIONS Law of Variable Proportions (Short run Law of Production) Assumptions: • • • • One factor (say, L) is variable and the other factor (say, K) is constant • by Geetika Prachish on Sep 29, 2013 Labour is homogeneous Technology remains constant Input prices are given 19
    20. 20. TOTAL PRODUCT FUNCTION (TP) • Represents the relationship between the number of workers (L) and the TOTAL number of units of output produced (Q) holding all other factors of production (the plant size) constant. • For a coffee shop, output would be measured in “number of coffee cups a day” • For a steel mill, output would be measured in “tons of steel produced a day” Marginal Product (MP) The additional output that can be produced by adding one more worker while holding plant size constant. Average Product (AP) • Represents the amount of output produced by each worker on average. Or • Output per worker. • by Geetika Prachish on Sep 29, 2013
    21. 21. CONCLUSION • Production function is simply a catalogue of production possibilities. • It is an engineering concept and since money prices do not appear in it,it merely depicts the physical relationship between the output and inputs. • by Geetika Prachish on Sep 29, 2013
    22. 22. QUESTIONS ??? by tanveerabbott on jan,o6 2013
    23. 23. Thank You
    24. 24. LIST OF REFERANCES • http://www.slideshare.net/geetsrivastava/production-function-26663899?qid=36099a90-6649-4cc6-97bdafd3d90257fd&v=default&b=&from_search=1 accessed (08/03/2014) • http://www.slideshare.net/tanveerabbott/production-function-15871760?qid=36099a90-6649-4cc6-97bdafd3d90257fd&v=default&b=&from_search=11 accessed(08/03/2014) • https://www.google.co.za/search?q=PRODUCTION&espv=210&es_sm=93&source=lnms&tbm=isch&sa=X&ei= wvoaU7zbO9GshQe3tYCwAw&ved=0CAkQ_AUoAQ&biw=1280&bih=880#facrc=_&imgdii=_&imgrc=1L2VYFYInKvLM%253A%3BmiwHgo0TxPXVSM%3Bhttp%253A%252F%252Faluminium.matter.org.uk%252Fc ontent%252Fmedia%252Fimages%252FsheetcanProductionStages.jpg%3Bhttp%253A%252F%252Faluminium.matter.org.uk%252Fcontent%252Fhtml%252 Feng%252Fdefault.asp%253Fcatid%253D199%2526pageid%253D2144416756%3B815%3B526 :accessed (08/03/2014) • http://www.npr.org/blogs/thesalt/2013/01/11/169150598/in-the-battle-between-health-and-taste-why-white-breadstill-wins accased(08/03/2014)
    1. A particular slide catching your eye?

      Clipping is a handy way to collect important slides you want to go back to later.

    ×