Production

1
Production

• Productivity
• If I do this, how many of those do I produce?

2
Motto of Mr. Couchs class

• What you learn can be measured by what you produce

3
All firms have costs

• A firm produces goods by combining factors of
  production
• Land (natural resources), labor, capital, and
  entrepreneurship

4
Short run

• In the short run, at least one factor of
  production is fixed
• Usually the firms capital for example its plant
• Often referred to as the owners overhead

5
Long run

• In the long run all factors of production
  employed can be varied
• You can increase or decrease the size of your
  plant
• It just takes more time to respond

6
Marginal product

• Marginal (physical) product is the extra
  production created as a result of employing an
  additional unit of a factor of production
• Answers How much more productive will I be
• Specifically If I employ one more of this,
• How many more of those do I get?

7
Diminishing returns

• The principle of diminishing marginal returns
  eventually, when at least one factor is fixed, a
  firm will experience diminishing physical product
  as it employs more of a variable factor (e.g.
  labor).
• in quantity produced

Eventually Declines
in units of input (labor)
8

total product
production
labor