Assignment Nos.

7
Production Analysis

Please answer the following questions and submit on the deadline date.

1. Discuss the concept of production on various point of economists. Cite example

on the basis of every economists perspective cited on these module.

 As explained by the two economists referenced in the lesson, production can be

defined in two ways. One perspective regards it as the process of converting raw
materials into a finished product. The other perspective, as I interpret it, sees
production as an activity, whether physical or mental, aimed at satisfying the
needs of individuals within a society.

2. Why do you think the various factors of production is an important concept of

economic in production?

 The factors of production are the essential resources used in the creation and
provision of goods and services, forming the foundational elements of an
economy. These factors include land, labor, capital, and entrepreneurship. They
serve as the fundamental building blocks of economic activities, enabling people
to manufacture various goods and services. By enhancing the efficiency and
effectiveness of these factors, businesses can increase their production output,
improve product quality, and potentially reduce costs. Any growth in production
contributes to economic expansion, as measured by indicators such as Gross
Domestic Product (GDP).

3. In what instances will the economists/managers use short run and long run
production. Give actual scenarios in the organization.

 The analysis of production and cost begins within a timeframe that economists
refer to as the "short run." In the short run, firms must operate under the
constraint of having one or more of their production factors fixed in quantity. For
instance, a restaurant may consider its physical building as a fixed asset for a
foreseeable period, such as at least a year, as expanding or modifying the
facility would take substantial time. When a factor of production cannot be
altered during a specific timeframe, it is termed a "fixed factor of production."
While managers are making decisions about their operations for the upcoming
year, they are also planning for longer periods. Over this extended period, they
might explore various strategic alternatives, such as renovating the building,
constructing a new facility, or even selling the building to exit the restaurant
business. This process of developing a strategy over time, encompassing all
aspects of production factors, is referred to as the "long run." In practice, firms
regularly make decisions that pertain to both short-term and long-term
considerations. Managers continuously contemplate new actions for the
immediate weeks and years ahead, allowing for adjustments in all facets of their
operations.