PRODUCTION

COMILLA UNIVERSITY
 Presented to

Presented by

Marjia Begum- 12114004 Somona Akter- 12114031

MD. Muhibus Saber Talha-12114010 Hannanul Alam- 12114034
Omi Akter-12114017 Umme Sumaiya- 12114039
Rupa Moni- 12114023 Rashed Miah- 12114045
Emtehad Haque- 12114028 Lutfur Nahar Khanam- 12013025
  Production

 Production Function

 Process of Production

CONTENTS  The Short Run

 Short Run Technology Constrain

 Diminishing Marginal Product

 The Long Run

 Returns to Scale
 Production
Production is the process of making or manufacturing goods and products from
raw materials or components.

LABOUR

Factors of Production
LAND ORGANIZA-
TION

CAPITAL
 Land:
Gift of nature that used to produce goods and services.

Labour:
The work time and work effort that people devote to producing goods
and service. ( Including Physical and mental efforts).

Capital
The tools, instruments, machines, buildings and other construction that
business use to produce goods.

Organization:
The way in which the means of production and distribution of goods are
organized, such as capitalism or socialism.
 Production Function

Production function expresses the relationship between the quantities of

productive factors (such as labour and capital) used and the amount of product
obtained.

FUNCTION Q= f(N,L,K,O)
Here,
Q= Production
N= Land
L= capital
O= Organization
 Process of Production

Process of
Production

The Short Run The Long Run

Variable
Fixed All
inputs/factors
input/factor(at inputs/factors
(everything
least one) are variable
else)
 The Short Run

The short run stats that within a time span , at least one input is fixed while others are
variable.

In the short run:

 Capital (tools, computers, buildings) is
fixed

 Resources like labour can be changed

 Decisions can be easily changed

 Short-Run Technology Constraint

Three concepts describe the relationship between output and the

quantity of labor employed:
 Total product is the total output produced in a given period.

 The marginal product of labor is the change in total product that results from a
one-unit increase in the quantity of labor employed, with all other inputs
remaining the same.

 The average product of labor is equal to total product divided by the quantity of
labor employed.
CURVES
 Relationship

Between MP & AP Between TP & MP

 Diminishing Marginal Product
Law of diminishing marginal productivity states that productivity will decline if a manager tries to expand
production by using a larger quantity of some (variable) inputs while using the same quantity of other
(fixed) inputs during a time period.

Marginal Total Product

Output Land Labour Product(MP) (TP)
1 1 1 10 10

2 1 2 20 30

3 1 3 30 60

4 1 4 20 80

5 1 5 10 90

6 1 6 0 90

7 1 7 -10 80
Diminishing curve
 The Long Run
The long run is a period of time in which all factors of production and costs are variable.

Difference between Short Run & Long Run

Basis of
Short-Run Production Function Long-Run Production Function
Difference
Input type At least one inputs ares are fixed. All inputs are variable.

Factors are classified as variable and fixed

Factors type factors
All factors are variable.

The law of diminishing marginal productivity is The law of returns to a scale is applied for this
Related Law applied for this function. function.

Price Demand is more active in price determination.

Demand and supply play equally in price
determination determination.
 Returns to Scale
Returns to scale refers to the rate by which output changes if all inputs are changed by the
same factor.

Output Land Labour Marginal Total Product

Product(MP) (TP)

1 10 1 100 100

2 20 2 300 400

3 30 3 600 1000

4 40 4 600 1600

5 50 5 600 2200

6 60 6 400 2800

7 70 7 300 3100