The document discusses several key concepts related to economics of production and growth including: production functions, diseconomies of scale, features of economic growth such as increasing output through more/better resources, barriers to growth like poor infrastructure, the difference between economic growth and development, determinants of growth, stages of growth, and growth strategies like balanced/unbalanced growth and big push strategies.

1. Economics of production and
Growth

2. Economics of production and Growth
• Production function-types of production economies
• Diseconomies of scale
• Features of growth
• Growth v/s Development
• Determinants of growth (economic and non-economic)
• Stages of growth
• Growth strategy- steady state and big – push growth strategy;
balanced and unbalanced growth

3. Production Function
• In economics, a production function relates physical output of a
production process to physical inputs or factors of production.
• The primary purpose of the production function is to address
allocative efficiency in the use of factor inputs in production and the
resulting distribution of income to those factors, while abstracting
away from the technological problems of achieving technical
efficiency, as an engineer or professional manager might understand
it.

4. Diseconomies of scale
• An economic concept
referring to a situation in
which economies of scale
no longer function for a
firm.
• Rather than experiencing
continued decreasing costs
per increase in output,
firms see an increase in
marginal cost when output
is increased.

5. • Diseconomies of scale can sometimes occur for the
follow reasons:
1. A specific process within a plant cannot produce the
same quantity of output as another related process. For
example, if in a product required both gadget A and
gadget B, diseconomies of scale might occur if gadget B
is produced at a slower rate than gadget A.
2. As output increases, costs of transporting the good to
distant markets can increase enough to offset any
economies of scale. For example, when a firm has a
large plant capable of producing a large output located
in one location, the more the firm produces, the more it
needs to ship to distant locations.

6. Economic Growth
• Economic growth is defined as an increase in an economy's ability to
produce goods and services.
• An increase in an economy's ability to produce goods and services,
therefore increasing economic output, is possible under two
conditions:
1. More resources are used in the economy.
2. Existing resources are used more efficiently.

7. • Economic growth is measured in changes in what is
called 'gross domestic product' (GDP).
• This is a measure of everything that has been
produced in an economy.
• Gross National Product (GNP) was the system used
before GDP was accepted internationally.

8. Barriers to economic growth
• We have seen earlier that the ability to grow an economy
depends on using more resources (land and labor, for
example), or on more efficient use of these resources.
• The correct term for the resources used is: factors of
production.
• There are four factors of production: land, labor, capital
and enterprise.
• Economic growth depends on the quality and availability
of these factors.
• If any of the factors of production suffers from a lack of
quality or availability, then economic growth will not be as
great as its potential.

9. So what can cause these factors of production to be of low
quality or unavailable?
• Insufficient or contaminated land
• Substandard labor supply
• Poor technical infrastructure, such as roads and communications
• Poor social infrastructure, such as schools or hospitals
• Poor industrial infrastructure, such as factories and machinery

10. Economic Development v/s Economic Growth
• Economic Growth is a narrower concept than economic development.
It is an increase in a country's real level of national output which can
be caused by an increase in the quality of resources (by education
etc.), increase in the quantity of resources & improvements in
technology or in another way an increase in the value of goods and
services produced by every sector of the economy. Economic Growth
can be measured by an increase in a country's GDP (gross domestic
product).

11. • Economic development is a normative concept i.e. it
applies in the context of people's sense of morality (right
and wrong, good and bad).
• The definition of economic development given by Michael
Todaro is an increase in living standards, improvement in
self-esteem needs and freedom from oppression as well
as a greater choice.
• The most accurate method of measuring development is
the Human Development Index which takes into account
the literacy rates & life expectancy which affect
productivity and could lead to Economic Growth.
• It also leads to the creation of more opportunities in the
sectors of education, healthcare, employment and the
conservation of the environment. It implies an increase in
the per capita income of every citizen.

13. Types of Growth Strategies
• Balanced growth – Simultaneous investment in a number of
industries so that there is a balanced growth of different industries
• Unbalanced growth – Concentration of investment in certain strategic
industries rather than an even distribution of investment among the
various industries

14. • Big Push Strategy – A big push is needed to overcome
the initial inertia of a stagnant economy. There is a
minimum level of resources that must be devoted to
a development programme if it is to have any chances
of success.
• Balanced, Unbalanced, Big Push – No single strategy
will take us to the goal of economic development. Not
only has the strategy to be changed from time to time
as the situation may require, but it may be necessary
sometimes to strike a balance between alternative
strategies.